The trend among mutual fund companies to offer multiple pricing options on individual funds could be hurting consumers, according to a study by a New York consulting firm.
The study by Money Marketing Inc. found that the performance of a given fund is dramatically affected by whether a consumer chooses to pay a sales commission up front, on redemption, or over the course of several years.
"Choosing the wrong class of shares can cause an investor to give up hundreds or thousands of dollars that could have accumulated in their account," said David Bruce, the company's president.
Fund companies increasingly are organizing mutual funds into "multiple classes of shares," enabling investors to choose up to even four pricing structures. Fund performance is affected by the timing and size of the sales commission.
Money Marketing said that in half the cases it looked at, the performance of one class of shares routinely lagged behind the others. The company studied pricing data from 200 mutual fund prospectuses.
