Buyer Beware: Class B Shares Consistently Lag A an

An investor’s time horizon can have a significant impact on A- and C-share returns. C shares show better results than A shares for the one-, three-, and five-year periods. A shares, however, outpaced C shares for the ten-year period. Over the shorter-term, C shares hold up better due to their minimal load, but over the longer term, C shares’ higher expenses reduce returns relative to less expensive A shares. The average expense ratio for A shares is about two-thirds that of the other two share classes.

“Investors buying funds through an intermediary should understand the cost structure of their funds since their choices will directly impact their fund performance,” said Rosanne Pane, mutual fund strategist for Standard & Poor’s.

Fees and expenses vary widely for fund share classes. On average, A shares have a front-end load of 5.44%, B shares carry a back-end load of 4.52%, and C shares have minimal loads. Average expense ratios are 1.35% for A shares, 2.05% for B shares, and 2.04% for C shares.