Question

Which type of mutual fund shares imposes a 12b-1 fee or contingent deferred sales charge and which type imposes a front-end sales charge or no or low 12b-1 fee?

A. Class A shares/Class C shares.
B. Class B shares/Class I shares.
C. Class B shares/Class C shares.
D. Class A shares/Class I shares.

Answer 1

Class A shares typically impose a front-end sales charge and have a low or no 12b-1 fee. Class C shares typically impose a 12b-1 fee or a contingent deferred sales charge.

Step-by-step explanation:

Class A shares of mutual funds typically impose a front-end sales charge and have a low or no 12b-1 fee. Class A shares are designed for long-term investors who want to minimize ongoing expenses. On the other hand, Class C shares typically impose a 12b-1 fee or a contingent deferred sales charge. This fee is used to compensate brokers and financial advisers who sell the mutual fund.