Mutual Fund Breakpoints
Mutual Fund Breakpoints have received a lot of press recently. One of the reasons for this is due to a study done by the NASD, that revealed many brokers and brokerage firms were not giving their customers the best prices on the execution of their mutual fund purchases. We at Financial Architects strive very hard to make sure that our clients receive all the discounts they are entitled to on their mutual fund purchases. In fact, we have been conducting an internal review due to a recent notification that was sent to our clients regarding these breakpoints; and we are happy to report that we have not found a single occurrence, to date, where our clients did not receive the best purchase price available.
Breakpoint Discounts
Breakpoint discounts reduce the front-end sales charge you pay when you purchase Class A mutual fund shares. The investment levels at which the discounts become available are called “breakpoints.” The amount of the discount is based on the size of the investment, and the discount increases as the size of the investment increases. For example, a 5% front-end load for a $10,000 mutual fund purchase may be reduced to 4.25% for a $50,000 purchase and to a 0% for a $1 million purchase. Typically, breakpoint discounts begin at investment levels of $50,000, but may begin at $25,000, and further discounts are then given at $100,000, $250,000, $500,000, $ 750,000 and $1,000,000
Breakpoints are available with most fund families even if you hold fund shares at different brokerage houses or with different investment advisors. Breakpoints are also available through a “letter of intent”, which means if you intend to invest enough to reach a breakpoint within the next thirteen months you can qualify for the breakpoint immediately.
If you have a situation like this or have any questions about how these breakpoints work be sure to give myself or Brienne a call so that we can assist in making sure you are getting all the discounts your entitled to on all of your mutual fund purchases.
520.884.7550
jpw@financial-architects.com
2311 E. Broadway