What is a breakpoint discount?
What is a breakpoint discount?
Breakpoint discounts are volume discounts to the front-end sales load charged to investors who purchase Class A mutual fund shares. The extent of the discount depends on the amount invested in a particular family of funds.
What does breakpoint fee mean?
A breakpoint is the dollar amount for the purchase of a load mutual fund’s shares that qualifies the investor for a reduced sales charge. Breakpoints offer investors a discount for making larger investments. The latter form of investment purchase in a fund must be documented by a letter of intent (LOI).
Are breakpoint sales illegal?
Unfortunately, some brokers take advantage of investors and will try to intentionally push them away from available discounts. This is a direct violation of FINRA rule 2342 which prohibits a practice known as a ‘breakpoint’ sale.
Do C shares count towards breakpoints?
As explained below, many mutual funds offer volume discounts to the front-end sales charge assessed on Class A shares at certain pre-determined levels of investment, which are called “breakpoint discounts.” In contrast, Class B and C shares usually do not carry any front-end sales charges.
Can brokers take your money?
While it’s rare that a broker will literally steal his client’s money (though that does happen), typically the “theft” of investment funds comes in the form of other fraudulent violations of securities law and FINRA rules which leads to significant investment losses.
What does CDSC stand for?
contingent deferred sales charge
A contingent deferred sales charge (CDSC) is a fee, sales charge or load, which mutual fund investors pay when selling Class-B fund shares within a specified number of years from the original purchase date.
What is breakpoint schedule?
Breakpoint schedules are levels set by the mutual fund that allows an investor to receive a sales load discount. Breakpoint discounts often begin at $25,000, with discounts increasing incrementally to a maximum level. Beyond the mutual fund’s maximum breakpoint level, investors will no longer incur sales load charges.
