Question about Share Classes ... FOCKX

curtin

Hello,
Can someone explain the reason why a fund has different "share classes"? What are the differences for the asset owners?
My 401K offers the FOCKX, I went to look them up and saw that there are several others in the same family. FOC*, FOT*
It appears to me these are the same underlying assets, with a different expense ratio/loads.
The expense ratio and loads
Symb | ER % | Load %
FOCKX | 0.66 | -
FOCPX | 0.73 | 0
FOTDX | 1.03 | 5.75 (wow)
FOTEX | 1.28 | 3.5
I thought loaded mutual funds were kind of dead ... Why would someone pay a Load and a higher expense ratio?
Cheers,
Craig

yogibearbull

Fido K-class is typically the lowest ER class available in 401k/403b/457. Count yourself lucky for FOCKX.
FOCPX is generally available for Fido a/c.
FOTDX and FOTEX are through advisor channels - advisors have to be paid and there are breaks on loads for large purchases.
Have you looked at the class-champion - American Funds with 18-20 classes?

mskursh

the reason for classes is because they are sold in different ways and the fund companies want to keep track of that. fees to advisors, marketing fees paid to broker houses, intermediary fees, etc. sometimes the way a 401k/403b is constructed, the ER fee is the only fee so to cover admin costs, its higher (See American Fund R2 shares). sometimes a class of fund is created thats used in internal asset allocation funds. so it has much lower expenses so the adjusted expense ratio isn't crazy (factors in underlying expense ratios in fund of funds)