Manage Class A Mutual Funds

Sometimes mutual funds will offer what is known as "class shares." Although every investor buys into the same investment portfolio, shareholder services and associated costs can vary drastically between the classes. Classes are labeled A, B and C, with some mutual funds even offering Class I shares to institutional investors.

Work with your financial advisor to establish several potential funds that offer Class A shares. In addition to assisting you with locating funds and investing your money, your financial advisor can also help you manage your portfolio.

Compare the past performances for each of the funds in which you're interested. The best way to find this information is by looking at the fund prospecutses. You can also chart performance by searching for your funds online.

Find out about the shareholder services and distribution arrangements for Class A funds for each of the funds. For example, most mutual funds offer more voting privileges to Class A shareholders, but many do not.

Determine what costs will be associated with your transaction. Class A shares usually incur a front end sales load, payable at the time of purchase.

Settle on a fund and be prepared to pay the front end sales load (usually around four to five percent of the purchase price) when you buy your shares.

Manage your Class A fund by charting its performance. If your fund has underperformed for 2 years in a row, it may be time to sell.

Tips & Warnings

• Find out if you can reduce your front end sales load by purchasing more shares. Some funds will authorize significant front end sales load reductions for large investments.
• If you don't meet the investment requirements for a reduction but plan to meet it in the near future, you may be able to use a letter of intent to obtain substantial savings now.
• Although it's a great idea to try to find a fund with low fees, don't choose one solely based on cost. Funds with low fees usually come with equally low performances.
• When investigating Class A shares, keep in mind that the front end sales load takes away a portion of your money that could have been better spent on shares.