Final answer:
Yes, a client can use multiple accounts invested in the same family of funds to achieve a reduced sales charge on a mutual fund. This is known as 'breakpoints' and allows for volume discounts on sales charges based on the amount invested.
Step-by-step explanation:
Yes, a client can use multiple accounts invested in the same family of funds to achieve a reduced sales charge on a mutual fund. This is known as 'breakpoints' in the investment industry. Breakpoints are volume discounts on sales charges that are offered to investors who invest larger amounts of money. The more a client invests in a particular fund family, the higher the discount they can receive on the sales charge.
For example, let's say a mutual fund charges a 5% sales charge for investments below $10,000. However, if a client invests $10,000 or more, they may qualify for a breakpoint that reduces the sales charge to 3%. If they invest $50,000 or more, they may qualify for a further breakpoint that reduces the sales charge to 1%. By spreading their investments across multiple accounts within the same fund family, a client can aggregate their investments to reach higher breakpoints and achieve reduced sales charges.
However, it is important to note that the reduction in sales charges only applies to the funds within the same family. If a client invests in funds from different families, the breakpoints and sales charges will be determined separately for each fund family.