What is a C-Share

A C-share is a class of mutual fund with a level load. Class C shares tend to not have front-end loads, but they often carry small back-end loads. These loads are typically around 1% and may vanish once the investor has held the shares of the mutual fund for a year.


Class C shares often have lower expense ratios than class B shares but higher expense ratios than class A shares. Class C shares may be a good option for investors who plan to sell after a relatively short period but will hold the shares for at least a year.

Investors who plan to withdraw funds within a year may want to avoid C-shares because of the back-end load that is typically charged on short-term redemptions. The higher ongoing expenses associated with C-shares make them an unappealing option for long-term investors. Many mutual funds offer both low ongoing expenses and no front- or back-end loads, so it is easy to avoid the drawbacks associated with C-shares. Higher mutual fund fees are not associated with higher mutual fund returns.

Fees Associated with Class C Shares

In addition to the back-end load of contingent deferred sales charge (CDSC) associated with class C shares, these shares may also charge a 12b-1 fee. A fund charges a 12b-1 fee to cover its distribution and marketing costs. Total 12b-1 fees are capped at 1% annually and are reflected in the fund's expense ratio. Of the 1% fee, distribution and marketing expenses can be up to 0.75%, while service fees max out at 0.25%.

In many cases, the presence of 12b-1 fees for class C shares can push the overall annual expense ratio above 2%. That expense ratio is in addition to any potential back-end loads charged.

Example of a Fund Offering Class C Shares

The Calamos Growth Fund is an example of a fund with both class A and class C shares. The class A shares charge an expense ratio of 1.32%, 0.25% of which is a 12b-1 fee, and a maximum 4.75% front-end load that decreases based on the amount that is invested. The fund's class C shares don't have a front-end load, but they carry a maximum 1% CDSC on shares held less than one year. The class C shares also impose the maximum 1% 12b-1 fee, pushing the fund's overall expense ratio to 2.07%.

As a comparison, no-load funds, sometimes known as no-transaction fee (NTF) funds, typically have much lower fees. For example, the Fidelity Contrafund, when purchased through the Fidelity platform, charges an annual expense ratio of 0.71% without any front-end or back-end loads.

Some of criticized sales of Class C shares for long-term investments. The differences in final values of investments with varying fees can be immense when held for a long period of time. For instance, take a $50,000 investment in a fund that returns 6% and charges annual operating fees of 2.25%, held for 30 years. The final amount the investor will receive will equal $145,093.83. A fund with the same amount invested and same annual returns but with annual operating fees of 0.45% will offer the investor significantly more, with a final value of $250,832.55.