Let's take a look at what a class C fund is. The so-called C-type fund means that there is no subscription fee, that is, there is no handling fee at the front end and the back end. Although Class C funds do not charge subscription fees, they usually charge an annualized "sales service fee", which is accrued on a daily basis. The corresponding Class A fund is the front-end fee, which is charged at one time when purchasing the fund, but not when redeeming it.
Then, let's take a look at the role and purpose of fixed investment. There is a saying circulating on Wall Street: "It is more difficult to step on the market accurately than to catch flying knives in the air." In fact, the fixed investment of the fund is to adopt the way of long-term bulk purchase to overcome the defects of one-time purchase and balance the investment cost. The key lies in long-term and bulk purchase.
After understanding the difference between Class A and Class C funds and the purpose and function of fixed investment, we can analyze the logic why Class C funds are not suitable for fixed investment.
From the charging mechanism of Class A and Class C funds, it can be seen that Class A funds are more suitable for long-term investment because its charging structure is subscription fee and redemption fee. In the long run, the cost will not increase with the time you hold the fund. Class C funds are more suitable for short-term investment, and their cost structure is sales service fee and redemption fee. The sales service fee will increase with the time you hold the fund share. The fixed investment of the fund is planned from a long-term perspective, so it usually takes a long time to reflect the role of the fund. It should be noted that the longer term here refers to more than one year.
According to the subscription fee and redemption fee of Class A funds and the sales service fee of Class C funds in the market, after calculation and comparison, it can be concluded that the inflection point of cost change is about 9 months. In other words, if you are going to hold a fund for 9 months, the cost of buying a class C fund is lower than that of buying a class A fund. When the holding period is more than nine months, the cost of purchasing class A funds is lower than that of class C funds.
Through the above analysis, we can basically understand the basic logic that Class C funds are not suitable for fixed investment, so when you buy funds, don't blindly buy them because you see that Class C funds don't need subscription fees, first determine your approximate investment period before making purchases.