How do C share mutual funds work?
Key Takeaways. Class-C mutual fund shares charge a level sales load set as a fixed percentage assessed each year. This can be contrasted with front-load shares that charge investors at time of purchase and back-end loads that charge at time of sale.
Mutual funds let you pool your money with other investors to "mutually" buy stocks, bonds, and other investments. They're run by professional money managers who decide which securities to buy (stocks, bonds, etc.) and when to sell them. You get exposure to all the investments in the fund and any income they generate.
Class C shares are level-load shares that don't impose a sales charge unless you sell too soon after your purchase (usually a period of a year). Instead, mutual funds charge an ongoing annual fee. C shares are probably best for short term investors of beyond one year and no more than three years.
Class C shares are often purchased by investors who have less than $1 million in assets to invest in a fund family and who have a shorter-term investment horizon, because during those first years Class C shares will generally be more economical to purchase, hold and sell than Class A shares.
The C Fund can be useful in a portfolio that also contains stock funds that track other indexes such as the S Fund and the I Fund. By investing in all segments of the stock market (as opposed to just one), you reduce your exposure to market risk. The C Fund can also be useful in a portfolio that contains bonds.
If you sell (redeem) Class C and 529-C shares before you hold them for 12 months, you will pay a 1% sales charge on the shares that you sell. This is called a contingent deferred sales charge, or CDSC. In some situations, your redemption will not be assessed a CDSC.
A mutual fund is an investment company that takes money from many investors and pools it together in one large pot. The professional manager for the fund invests the money in different types of assets including stocks, bonds, commodities, and even real estate. An investor buys shares in the mutual fund.
Class C shares would work best if you are planning to invest for a limited period of more than one year but less than three. This way, you avoid both front-end and back-end loads. Although your expense ratio will typically be higher than Class A shares, your full investment will gain interest while it is invested.
As explained below, many mutual funds offer volume discounts to the front-end sales charge assessed on Class A shares at certain pre-determined levels of investment, which are called "breakpoint discounts." In contrast, Class B and C shares usually do not carry any front-end sales charges.
To reduce ongoing costs for long-term investors, Class C shares, including shares acquired by dividends, convert to Class A shares after an investor has owned them for 8 years.
Do Class C shares pay dividends?
The Class C shares may also be distributed to the patrons as part of the yearly patronage dividend. Class C shares may neither be sold nor assigned to non-patrons. However, Ace may approve a person to become a patron in order for shares to be transferred.
Class A shares generally have more voting power and higher priority for dividends, while Class B shares are common shares with no preferential treatment. Class C shares can refer to shares given to employees or alternate share classes available to public investors, with varying restrictions and voting rights.
Starting on or about January 22, 2021 (the “Effective Date”), Class C shares will be eligible for automatic conversion into Class A shares on a monthly basis approximately eight years after the original date of purchase (the “Conversion Date”).
The C Fund is a heavily diversified investment but it does come with the risks. The C Fund is moderately volatile and is subject to market risk as the price of stocks in the S&P 500 Index rise and fall. Further, you are exposed to inflation risk if your C Fund investment does not grow enough to offset inflation.
Companies often classify different classes (=types) of shares using letters. C share is used most commonly to describe a new class of shares issued by an investment company. The C shares have their own portfolio while the money raised by issuing them is invested.
Thrift Savings Plan C Fund Monthly Returns (I:TSPCFMR)
Thrift Savings Plan C Fund Monthly Returns is at 4.54%, compared to 9.12% last month and -5.78% last year. This is higher than the long term average of 0.95%.
The TSP C Fund is a U.S. stock index fund invested in common stocks of the 500 companies in the Standard & Poor's 500 (S&P 500) Index. Many of the stocks in the index are household names, such as General Electric, Coca Cola, Exxon Mobil, and Walt Disney.
Class-A shares are held by regular investors and carry one vote per share. Class-B shares, held primarily by Brin and Page, have 10 votes per share. Class-C shares are typically held by employees and have no voting rights.
Mutual funds are an excellent option if you want an easy way to diversify your holdings (i.e., set-it-and-forget-it) or don't have the time, interest, or expertise to research companies, pick individual stocks, and manage your portfolio.
Most mutual funds fall into one of four main categories – money market funds, bond funds, stock funds, and target date funds. Each type has different features, risks, and rewards.
How do mutual funds make me money?
Mutual fund returns can come from several sources: Appreciation in the fund's NAV, which happens if the fund's investments increase in price while you own the fund. Income earned from dividends on stocks or interest on bonds. Capital gains or profits incurred when the fund sells investments that have increased in price.
You can either pocket the money or reinvest and buy more shares. This money is paid out when your investment is sold for a higher price than what you originally paid for it. (That's why you hear the phrase, "buy low, sell high.") But you don't get that money until you sell your shares.
Mutual funds collect these dividends as income and then distribute them to shareholders pro rata. All funds must legally distribute their accumulated dividends at least once a year. Those focused on producing continuous income for investors may pay dividends quarterly or even monthly.
Effective June 30, 2020: Class C shares convert to Class A shares in the month of the 8-year anniversary. 529-C shares convert to 529-A share in the month of the 5-year anniversary. This change ultimately benefits 529-C shareholders as they will incur lower 12b-1 expenses after conversion.
C Price is the current last price that the stock was traded at. MTM P/L is the calculation of the profit or loss an investor makes when holding shares and compares the original purchase price with the current (marked-to-market) price multiplied by the number of shares held.
