|
Breakpoints are the amounts—the investment levels—at which some mutual funds offer discounts on sales charges. In short, they reward investors for making larger investments. The more you invest in a fund that offers breakpoints, the less you pay in sales charges. Breakpoints are generally available only from funds that charge what's known as a "front-end sales load." Front-end sales loads are sales charges you pay when you buy shares in the fund and which reduce the amount of your investment. But be aware: not all funds that charge front-end sales loads offer breakpoints.
Why does this matter?
Breakpoint discounts can save you money. For example, a mutual fund might charge you a front-end sales load of 5.75% for all purchases of less than $50,000, but reduce the load to 4.50% for investments between $50,000 and $99,999, and further reduce or eliminate the sales load for even larger investments.
Here are a few tips.
Use FINRA's Mutual Fund Expense Analyzer to learn what breakpoint discounts may be available and calculate the impact of those discounts on your investment. Before making a mutual fund purchase, review your account statements and those of your family to find amounts of investments in a particular mutual fund or family of funds to see if these transactions can be combined to obtain a breakpoint discount. And be sure that you tell your broker about your mutual fund holdings and those of your family, including holdings at other brokerage firms or with the mutual fund itself.
|
