Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, October 22, 2007

Sales of B Shares Continue to Decline

In a few years Class B shares in mutual funds may be extinct, thanks to regulatory pressure to thwart brokers' sales of B shares in lieu of more suitable A shares, as well as (perhaps) better investor education as to the differences.  In recent years, investors have pulled out more money from B shares than they have invested; last year, net outflows were more than $57 billion, according to an industry source.  Brokers frequently pushed more expensive B shares as an alternative for "no-load" funds because the sales charge was at the back end.  In addition, B shares were frequently sold to customers whose dollar amounts made A shares a better deal.  InvNews, Sales of B shares continue to wane.

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