Breakpoints
Mutual funds often reward customers for investing larger amounts in a fund or a family of funds. The reward is a discount on a front-end sales charge if they reach a certain dollar amount. The dollar amount is called a breakpoint.
Example: MegaFund charges a 5% sales charge on investments under $25,000, but charges 4.25% on investments above $25,000. The breakpoint in this case would be $25,000.
FINRA offers the following sample breakpoint schedule:
|
Sample Breakpoint Schedule |
|
|
Class A Shares (Front-end Sales Load) |
|
|
Investment Amount |
Sales Load |
|
Less than $25,000 |
5.0% |
|
$25,000 but less than $50,000 |
4.25% |
|
$50,000 but less than $100,000 |
3.75% |
|
$100,000 but less than $250,000 |
3.25% |
|
$250,000 but less than $500,000 |
2.75% |
|
$500,000 but less than $1 million |
2.0% |
|
$1 million or more |
0.0% |
As an investor