why are foundations classified into class a and class c, and what is the difference between them? Now, let's talk about this topic.

A and C have different meanings

Different types of fund products, such as Class A and Class C, represent different meanings.

For funds, Category A usually refers to "front-end fee share", that is, the subscription fee is directly deducted at the time of subscription. Class C stands for "sales service fee mode", that is to say, the subscription fee and redemption fee can be exempted, and the sales service fee can be withdrawn on a daily basis.

The first fund to implement classified fees is a summer bond fund established in October 22. The fund has two classification methods: front-end charging mode (Class A) and back-end charging mode (Class B). Among them, the front-end charge charges the subscription fee at the time of subscription, and the back-end charge means that the subscription fee is not charged at the time of subscription, and this fee can be delayed until redemption, and the longer it is held, the lower the fee is. However, because the B-type charging model is not welcomed by fund companies, it is gradually marginalized, so in recent years, new products rarely see B-type products.

in April, 26, the class c share of a summer bond was launched, which made the class c share formally born. Prior to this, products similar to the current C-mode have appeared, that is, Southern Dolly's short-term debt, which was established in March 26, pioneered the introduction of the charging mode of "continuous sales fee", and no longer charged the traditional subscription redemption fee, but charged a certain percentage of fees every day. This fee will be deducted from the fund's net value. Since Class A does not need to deduct the "continuing sales fee", the unit net value of Class A is slightly higher than that of Class C..

is it a or c? I believe many citizens will have questions about this. In fact, this needs to be analyzed in detail according to the length of holding time.

in order to explain the problem more intuitively, we choose A/C, a bond fund owned by a rich company, to explain it. At present, the management fees of share A and share C are both .7%/ year, and the custody fees are also .2%/ year. The difference lies in the subscription rate, redemption rate and sales service rate. Crucially, because the redemption rate varies with the holding time, the following calculation is mainly based on different holding days.

The A share and C share of the fund have the same investment operation, and the main difference between them is the different rate structure. If it is held for 5 days, the subscription fee for Class A is .1%, corresponding to the redemption fee of .1%, which is .11% in total. The sales service fee to be withheld for Class C is .4%×5/365=.548%, which is obviously more cost-effective than that for Class A.: By analogy, the holding time reaches 1 days, and the cost of Class A and Class C is similar. When it is more than 1 days, Class A will show its advantage in cost.

if you buy a stock fund or a partial stock fund, the standard subscription fee is 1.5%, the redemption fee for holding it for 3 days to 1 year is .5%, the redemption rate for holding it for 1 to 2 years is .25%, and the redemption fee is exempted for more than 2 years. If the rate is not discounted, it needs to be held for more than 3.75 years, and Class A is more cost-effective than Class C. At present, except for banking channels, most third-party channels and brokerage channels have a discount of 1% on subscription fees, and fund direct sales channels have a discount of .1%. Even companies that are exempt from subscription fees have a cost-effective time corresponding to Class C of one year (redemption fees are too expensive within one year).

In addition, if the fund's net value rises, the sales service fee withheld by Class C is higher, and the corresponding cost-effective time is shorter than that of Class A.. This is more obvious in stock funds or partial stock funds.