I own a few different mutual funds, but I don’t understand what the difference is between classes A, B, and C shares. Can you explain the difference?

The differences between classes A, B, and C shares lie in how the broker is paid a commission to sell the fund and the expenses to manage the fund. The Class A share typically has a front end sales charge that the investor pays the day the fund is purchased. The Class B share does not have a front end sales charge, but will impose a deferred sales charge if the fund is sold within a certain time frame, typically 4-7 years. The Class C share does not impose a sales charge at the date of purchase, however the internal expenses and 12b-1 fees can be much higher than the Class A share and slightly less than the Class B share. Class C shares typically impose a 1% sales charge if the fund is sold within the first year; however this is not always the case. 12b-1 fees are the ongoing internal expenses used to pay for marketing or compensation to the broker selling the fund. They do not go away over time on the class C share fund. The typical 12b-1 fee ranges anywhere from .25% to 1% and this is on top of the management fee charged to manage the fund. So now the question is which one is better? In my opinion expenses do matter over time. No-load funds might be the best option, but they are not typically sold by brokers because there is no commission to be earned. Mutual funds need to be researched before purchased. Many times the track record of returns that are published can be misleading for various reasons. For one, there may have been multiple fund managers over the life of the fund. Make sure you do your homework before investing.