Series 24: Breakpoints

Breakpoints

Mutual funds often reward customers for investing larger amounts in a fund or a family of funds. The reward is a discount on a front-end sales charge if they reach a certain dollar amount. The dollar amount is called a breakpoint.

Example: MegaFund charges a 5% sales charge on investments under $25,000, but charges 4.25% on investments above $25,000. The breakpoint in this case would be $25,000.

FINRA offers the following sample breakpoint schedule:

Sample Breakpoint Schedule
Class A Shares (Front-end Sales Load)
Investment Amount	Sales Load
Less than $25,000	5.0%
$25,000 but less than $50,000	4.25%
$50,000 but less than $100,000	3.75%
$100,000 but less than $250,000	3.25%
$250,000 but less than $500,000	2.75%
$500,000 but less than $1 million	2.0%
$1 million or more	0.0%

As an investor