Class A shares charge upfront fees and have lower expense ratios, so they are better for long-term investors. Class A shares also reduce upfront fees for larger investments, so they are a better choice for wealthy investors.
The key distinctions among share classes are the sales charges and ongoing fees and expenses you pay in connection with your investment in the fund. advantageous for you. Investors generally should consider Class A shares (the initial sales charge alternative) if they expect to hold the investment over the long term.
Class A shares typically impose a front-end sales charge, which means a portion of your money isn't invested and is instead paid in part to the brokerage firm selling you the fund. Let's say you spend $1,000 to purchase Class A shares, and the fund imposes a front-end sales charge of 5 percent.
Class A shares can also be converted into more than one share of common stock. If for example a CEO owns 10,000 shares that can be converted into 25,000 of common stock, and the company is sold, the CEO then essentially earns a profit off the combined share price of the 25,000 shares.
Key Takeaways. Class A shares refer to a classification of common stock that was traditionally accompanied by more voting rights than Class B shares. Traditional Class A shares are not sold to the public and also can't be traded by the holders of the shares.
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