How to Choose the Right Share Class

You want to choose the no-load or institutional share class. If you are a no-load investor who is determined to buy a fund that primarily broker-sold, go through a supermarket and opt for the D shares.

If you use a broker or planner, the decision about whether to opt for the A, B, or C share class comes down to your own time horizon and to a lesser extent, how much you invest. If you are planning to invest for the long term - say, 10 years or more - the shares will always make more sense for you than the B or C shares. That's because the shares' lower running costs, the higher fee you pay to get in. When Morningstar compensate, we believe investing in the long term and that is why we tend to recommend shares than B or C shares , if you 're a  Premium Member, you will find that our analysts Reports of broker-sold funds usually applies to the A shares, too.

So if you ever use B or C shares? Perhaps, if you expect to hold. Fund a particular kind for a short period of time If you plan to create a fund for only a year or two have, for example, you can opt for C Shares, and if your time horizon is around five years or less, the B shares of the way to go . Morningstar Cost Analyzer tool can help you find the right share class given your expected time horizon and the amount of money you have to invest to be determined. (Cost Analyzer is available for Premium Members of , for a free trial membership, click here.)

Protect yourself: Know your rights and Ask Questions
Many brokers and planners work hard to select the appropriate share class for their clients but you should also be aware of unscrupulous practices in this area. B and C shares have higher costs, and a portion of these fees, called 12b-1 fees, go directly to the agency by year. For example, some brokers tend to B or C shares recommended, even if not the best deal for their clients. Some fund shops - including Franklin - have stopped the sale of B shares at all.

To ensure that you are in the right class shares for your needs and time horizon, it never hurts to ask your broker why he or she is recommending a particular share class of a fund. What assumptions are they making about your business period? He or she has a financial incentive to recommend one share class over another?

Also be sure to ask if your total investment in a particular fund family qualifies you for a reduced sales charge. These breakpoints often kicks in when your total investment in the Fund as a whole family reaches $ 25,000 or more, and they can save you money. And even if you do not meet the minimum level active, you may still be able to qualify for the discount if you are a "letter of intent stating that you intend to make enough money to qualify for the investing in sign of time (usually one year). a certain period discount Some brokers have recently gotten in trouble for failing to provide the bulk discounts, so your broker should be well aware of the problem and can tell you if you are eligible.