Breakpoint
Definition of 'Breakpoint'For load mutual funds, the dollar amount for the purchase of the fund's shares that qualifies the investor for a reduced sales charge (load). The purchase may either be made in a lump sum or by staggering payments within a prescribed period of time. The latter form of investment purchase in a fund must be documented by a letter of intent. |
|
Investopedia explains 'Breakpoint'For example, suppose that an investor plans to invest $95,000 in a front-end load mutual fund and faces a sales charge of 6.25%, or $6,125. If a breakpoint of $100,000 exists with a lower sales charge of 5.5%, the investor should be advised to invest an additional $5,000. If the investor can add another $5,000 to the investment, he or she would benefit from a lower breakpoint sales charge of $5,500, or a savings of $625 on this transaction.Mutual funds are required to give a description of these breakpoints and the eligibility requirements in the fund prospectus. By reaching or surpassing a breakpoint, an investor will face a lower sales charge and save money. Any investor purchase of fund shares that occurs just below a breakpoint is considered unethical and in violation of NASD rules. |
Related Definitions
Articles Of Interest
-
Lower Your Fees With Mutual Fund Breakpoints
The lower the sales charge you pay, the greater your returns. Find out how to cash in. -
The ABCs Of Mutual Fund Classes
Do you understand how the various types of shares differ? We give you the pros and cons of each. -
Mutual Fund Basics Tutorial
Learn about the basics - and the pitfalls - of investing in mutual funds. -
Introduction To Treasury Inflation-Protected Securities (TIPS)
If you want to protect your portfolio from inflation, all you need are a few TIPS. -
6 Asset Allocation Strategies That Work
Your portfolio's asset mix is a key factor in whether it's profitable. Find out how to get this delicate balance right. -
How To Cut Your Mutual Fund Fees By Up To 90%
Most mutual funds don’t come close to beating the indexes they’re compared against. And yet they carry steep fees for active management. Find out how a little research and effort can cut your ... -
A Top-Down Approach To Investing
Use a global view to determine which stocks belong in your portfolio. -
How Risk Free Is The Risk-Free Rate Of Return?
This rate is rarely questioned - unless the economy falls into disarray. -
Investing With A Purpose
Your reasons for investing are bound to change as you go through the ups and downs of life. Setting goals is the first step in determining which investment vehicles are right for you. -
Beware Of The Mutual Fund Performance Trap
Want to own a mutual fund that will double its reported return in the next six months? Chances are, you already do. Every equity mutual fund on the planet is about to report a big jump in ...
Free Annual Reports