What are A Shares?
How A Shares Work
A shares have a "front-end load" fee structure. A certain percentage of the initial investment is taken out as commission up front. Therefore, the total amount invested in the is the initial investment amount less the commission.
back-end load." This means that the entire initial investment amount is invested into shares, but when the investor is ready to sell the shares, a certain percentage is deducted and paid to the as commission. Therefore, the investor receives less than the total value of the investment when the shares are sold. can be converted into A shares if the investor decides the front-end payment structure is more advantageous.have a "
money paid to the is invested in shares, but commissions are paid annually. This level- structure is unique to . Also -- unlike -- cannot be converted into A shares.have a "level- " fee structure. This means the full amount of
Let's look at an example to clarify the concepts:
Joe invests $1,000 into A shares of a fund. If Joe's investment grows by 10%, he would keep all of the $1,045 if he sells his A shares after one year.. He buys A shares with a 5% commission. With their front-end structure, 5% of Joe's $1,000 investment would be deducted immediately as commission. Only $950 of Joe's money would be invested in shares, but he would not owe any more commission fees to the
If Joe buys $1,000 of, because they are level- shares, the full $1,000 goes toward buying shares. But regardless of the fund's performance, Joe pays an annual commission fee to the fund.
Why A Shares Matter
A shares allow investors to pay yield on their in order to get to positive territory.upfront, and collect the entire amount the is worth when they are ready to sell. But, upfront fees that investors need to have a higher
advisors consider expense ratios of less than 1% to be reasonable.must disclose their fees to potential investors. Most