How do i get out of Class B Load(back end) Funds?
I've learned alot about mutual funds through books, forums etc...and realize I should be in No Load mutual funds like T.Rowe Price and Vanguard etc.... I have American Funds in my Roth IRA with a broker and I'm unsure how to or the process of getting out of these loaded funds. The funds themselves have perfromed well however these loads are eating away my returns? Any advice on what to do would be great! Help!
- 1 decade agoFavorite Answer
Back end load funds are going to give you a "hit" like the previous answer states...if you haven't held them for that period of time...which is typically anywhere from 4 to 7 yrs.
But, don't assume you will always do better in a no load fund. I am a big fan of doing your research...and you get what you pay for...nothing is free...not even "no load" funds. Find a website that compares fund performance history. That will tell you a lot about what investments your in and any new investments your looking getting into.
I am a fan of the "C" share in which you pay as you go...if you will.
Just FYI..."A" shares are up front fee 4 to 8% typically
"B" shares are back end fees....first yr exit 8 to 7%...next yr 6 to 5%...next yr...3 to 2%...im sure you get the drift here.
"C" shares...you pay 1% when you go in and usually 1% annually as you carry the fund...
mind you...these are "guidelines" but that is kind of how they work.
- 1 decade ago
Are the loads really eating away your return? have you done the comparison to the fund you now desire...
the American Funds returns are net of all fees and you didnt pay a load to buy them ....
you can transfer within American funds at no charge into another sector if thats what you want.
otherwise if your heart is set on T Rowe Price you can either pay the back end sales charge... or hold it until the cdsc runs out (usually 5-7 years after purchase) and then sell.
Keep in mind the shares will convert to A that have lower internal expenses also...
If all this is new to you.... do you really think you should be managing your own money>?
- 1 decade ago
You can try B to D conversions if possible. I really don't know what you're trying to do...
Mutual fund fees are not 8%, so please don't listen to that person. Also, class C is only assessed sales charges if you sell within 13 months.Source(s): I am a former financial advisor.
- Anonymous1 decade ago
Simple - sell them, and buy no load funds. You'll have to take the hit now, but you'll make out better in the long run.