When you buy any flavor of mutual funds, you're paying fees that go to your broker. How you pay these fees (which are called "loads") depends on the type of mutual fund you have.
A-shares have a front-end load, meaning you pay your fees (around 8%) to the selling broker when you buy—it's very thoughtfully added to the price right then.
B-shares are marketed with the lure that there's potentially no load, but if you sell early, the sales charge applies then (on the "back end," as the finance types like to say). B-shares basically require you to hold onto them for a minimum period, or else you get dinged with a fee. This extra fee is called the contingent deferred sales charge.
How much is it exactly? It depends on when you sell. The earlier you sell, the more you pay.
The SEC has really clamped down on contingent deferred sales charges in recent years, because most mutual fund investors hold shares for a period less than the CDSC (minimum) period, and the regulators thought that to be unfair and abusive. After the CDSC period has passed, B-shares just convert to being A-Shares—"no load," but there's no further sales charge.
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Finance: What is Contingent Liability?4 Views
Finance allah shmoop what is contingent liability All right you
know what a liability is right It's a debt it's
a promise you've made that you need to fulfill teo
pay someone and fulfilling it can be done with cash
or ah promise of delivering inventory or after you've sold
the home to the joneses An interesting family with oddly
large foreheads you know delivering good title to the home
to them right So you're fulfilling liability of producing your
home so what's a contingent liability Well think of it
is a call option or a put option on a
security A contingent liability is a derivative of some other
underlying being like another liability Well the most common contingent
liability would be a filed lawsuit that is more than
just an ambulance chasing securities lawyer hoping to get a
quick five hundred grand to go away google might be
willing to pay three billion dollars toe by ring That
wireless doorbell company started by some weirdo contingent upon ring
properly defending its lawsuit from honeywell which claims that they
own the patents on the process while the financial outcome
of that lawsuit is a contingent liability to the company
Ring and the outcome of the joneses moving into town
well is a worldwide dominance and the enslavement of all
human I mean that's what's at stake their people But 00:01:31.39 --> [endTime] not least they keep their front lawn looking nice
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What is a Contingent Deferred Sales Charge? A Contingent Deferred Sales Charge is a fancy name for a back load fee for mutual fund B shares. Basica...