DEFINITION of 'Cumulative Discount Privilege'

A way that an investor in a mutual fund can qualify for lowered fees by totaling transactions in several funds from the same fund family to obtain a reduced fee. Generally, fees for investing in a mutual fund decrease as the amount that a person invests increases; therefore, if there is a required minimum investment that allows an investor to receive the fee discount, the investor can receive the discount without having to invest all of that minimum in the same fund. Investors can also qualify for lower fees by committing to make several investments in a fund over a defined period.

BREAKING DOWN 'Cumulative Discount Privilege'

If a mutual fund's fees are 4.5% for $5,000 invested, but 3.5% for $10,000 invested, the cumulative discount privilege means that you won't need to invest $10,000 in one fund to get the reduced fee. Instead, you can invest $10,000 in several different funds from the same fund family to get the rate. You can also set up an agreement to invest the $10,000 into the fund in smaller increments over an allotted amount of time. As long as you follow the agreement, you will be charged the lower fee.

RELATED TERMS
  1. Exchange Fees

    A type of investment fee that some mutual funds charge to shareholders ...
  2. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  3. Redemption Fee

    A fee collected by an investment company from traders practicing ...
  4. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  5. Fund Supermarkets

    An investment firm or brokerage that offers investors a wide ...
  6. Advisor Fee

    The fee that is paid to a financial advisor for recommending ...
Related Articles
  1. Managing Wealth

    How To Optimize Your Portfolio and Reduce Fees

    Investment fees aren't avoidable altogether, but there are strategies investors can employ to keep those fees at bay and reduce the impact on returns.
  2. Investing

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  3. Investing

    Looking to Buy Mutual Funds Online? Here Is How

    Learn how to buy mutual funds online; discover which websites offer mutual fund trading services, how to choose a fund and typical fees.
  4. Investing

    A Guide To Investor Fees

    Fees are one of the most important determinants of investment performance and something that every investor should know.
  5. Financial Advisor

    How Mutual Fund Companies Make Money

    Read about the many different kinds of fees and sales charges mutual fund companies can use to generate revenue from those who invest in their shares.
  6. Investing

    How To Pick A Good Mutual Fund

    Learn how to evaluate mutual funds and find the right one for you.
  7. Investing

    Mutual Funds Are Awesome - Except When They're Not

    This investment is very popular, but that doesn't mean it comes without risk.
  8. Investing

    3 Investment Fees That Are Negotiable

    Investment fees are a necessary evil but that doesn't mean they have to be overly costly. There are ways to negotiate some of the expenses down.
  9. Investing

    4 Mistakes to Avoid When Choosing Mutual Funds to Invest in

    Mutual funds are a great way to build wealth but not all of them are the same. Investors have to be mindful of fees, turnover, redundancy and performance.
  10. Financial Advisor

    Using ETFs To Replace Your Expensive Mutual Funds

    Fees associated with many mutual funds looks small. Some are barely over 1% or even lower. But over time those fees erode the overall value of your portfolio. And even in the near term, as in ...
RELATED FAQS
  1. Why is a mutual fund's expense ratio important to investors?

    Understand the nature of mutual fund expense ratios, and learn why it is critically important for investors to be aware of ... Read Answer >>
  2. What is an appropriate small cap mutual fund fee?

    Figure out the industry average fee for small-cap mutual funds, and determine the appropriate fee an investor should pay ... Read Answer >>
  3. In what situations would mutual fund fees be higher than ETF fees?

    Compare the fees associated with investing in mutual funds and exchange-traded funds and find out why ETF fees are usually ... Read Answer >>
Hot Definitions
  1. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  2. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  3. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  4. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  5. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  6. Four Percent Rule

    A rule of thumb used to determine the amount of funds to withdraw from a retirement account each year. The four percent rule ...
Trading Center