What are the differences between A, C, and Preferred Shares?
What are the differences between share types like A, C, or Preferred shares? What are the advantages and disadvantages?
Here is a resource that explains what you are looking for. http://www.investopedia.com/articles/mutualfund/05/shareclass.asp
As an aside, I would advise not investing in any funds that have A, B, C, etc shares, and instead, choose no-load, no transaction fee investments. The share classes, A,B,C, etc were created by financial companies to incentivize brokers to sell their funds. Basically, it was a way for the mutual funds to pay sales people to push their funds.
Mutual funds come in a variety of share classes, but I would recommend selecting no-load funds that trade with no transaction fee and have a low expense ratio. Keeping costs low keeps more in your pocket to grow and compound over time.
But to answer your question:
Class A: sales charge when you buy the fund
Class B: Charges higher expenses than A shares for a certain period (often 4 to 8 years). Class B shares also normally impose a contingent deferred sales charge (CDSC), which applies if you sell your shares within a certain number of years.
Class C: ongoing level commission
More details here: http://www.investopedia.com/articles/mutualfund/05/shareclass.asp
But the bottom line is that you don’t have to, and should not, pay any of these fees if you select a no-load fund or ETF with no transaction fee.
“Preferred shares” and “mutual fund share classes” are apples and oranges. Mutual fund share classes have to do with how the person selling you the fund is compensated. Preferred shares have nothing to do with mutual fund share classes.
Rather, preferred shares are a type of security, like stocks or bonds. Just as you can invest in the stock or bond of a particular company, sometimes there is a hybrid option called “preferred shares.” Preferred shares (also known as preferred stocks) have qualities of both stocks and bonds because there is an equity portion and an income portion. Typically, preferred shareholders experience less capital growth than common stock shareholders, but they have the stabilizing factor of income from dividends. If the company was to have financial difficulties, preferred stockholders have the right to be repaid missed dividends, while common stockholders do not. Preferred stockholders typically do not have voting rights, but common stockholders do. Not all companies offer preferred stocks.
It's not clear if you are discussing Corporate shares or Mutual fund shares. I assume you mean corporate shares because you mention 'Preferred.'
Corporations often issue various classes of shares of stock to make up their capital structure. They usually vary as to voting rights, equity rights, and dividends. Preferred shares usually pay a higher fixed dividend than common equity and have a preferential (preferred) claim on earnings of the corporation. These dividends must be paid before the dividends on common equity. Sometimes, they are cumulative and all past dividends must be paid before common shareholders share in earnings and receive the dividends.
Different share classes like A or B commonly have differing amount of votes. Sometimes the A shares have one vote while the B shares have 10.This allows insiders to retain control with small amounts of holdings. In return for more votes, there is usually a difference in dividends. Often the shares with less votes pay a higher dividend than the shares with more votes.