The best way to determine the features of share classes (A, B, C, etc.) a mutual fund offers is to read the fund prospectus. Mutual funds with Class A shares (a.k.a., load funds) typically carry an up-front sales charge of up to 8.5% of the amount invested. A mutual fund is considered low-load if it charges a smaller up-front fee of 1% to 3%. Chass B shares typically do not charge investors to make a fund purchase but do charge a back-end fee if you sell shares early. Typically, the back-end charge declines 1% each year until it disappears after the fifth or sixth year after purchase. Class C shares have high ongoing 12b-1 and management fees. A 12b-1 fee, named for the SEC rule that allows this charge, is a fee for fund advertising, marketing, and distribution that is deducted annually from a mutual fund's assets.

When deciding among fund share classes, buy the lowest expense fund for your expected holding period. That means avoiding C shares that generally charge a 12b-1 fee if you plan to hold a mutual fund long term or for an indefinite period of time. A rule of thumb is to buy class A or class B shares if you plan to stay invested for seven or more years. You will pay a higher sales charge up front in the case of class A shares, but it will be spread out over a number of years. You will also have lower ongoing costs than class C shares. Class B shares are also suitable for longer-term investing because the back-end sales charge (load) will disappear over time. To compare between class A and class B shares as a long-term investor, review the historical performance of each share class in the fund prospectus and select the one with the higher return in several different holding periods.

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