What Does Contingent Deferred Sales Charge (CDSC) Mean?
A fee (sales charge or load) that mutual fund investors pay when selling Class-B fund shares within a specified number of years of the date on which they were originally purchased.
Also known as a "back-end load" or "sales charge".
Contingent Deferred Sales Charge (CDSC)
For mutual funds with share classes that determine when investors pay the fund's load or sales charge, Class-B shares carry a contingent deferred sales charge during a five- to 10-year holding period calculated from the time of the initial investment.
The fee amounts to a percentage of the value of the shares being sold. It is highest in the first year of the specified period and decreases annually until the period ends, at which time it drops to zero. As a mutual fund investor, if you were to buy and hold Class-B fund shares until the end of the specified period, you could avoid paying this type of fund's sales charge, thereby enhancing your investment return. Unfortunately, fund research indicates that mutual fund investors are holding their funds, on average, for less than five years, which often triggers the application of a back-end sales charge in a Class-B share fund investment
ok so why would\should I buy class b funds then? Are there advantages of class b funds over others, that could out weight this backend potential cost? Do other class funds have front end load charges or something along those lines for costs to purchase them? Why would there be a cost to any of them at all, after all aren't we helping things out by actually investing in the first place? Sorry for all the questions, this thing is confusing to your average guy.
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