Even if you don't reach the breakpoint
in a single purchase, you may still qualify for a discount.
Some funds combine the amounts of your current
and previous purchases to calculate your eligibility. For instance,
if you're investing $5,000 in a fund today that you have
invested $20,000 in previously, you may qualify for a breakpoint.
This is called your "right of accumulation," or ROA.
Some mutual fund companies calculate your
eligibility based on your holdings in a single fund, while others
calculate it against your total holdings within the same fund
family or network. For example, if you have over $100,000 invested
in a variety of funds within the same fund family, you may be
eligible for a breakpoint discount. Some fund companies go even
further and base it on your total investments—including
brokerage accounts, retirement accounts, and
college savings plans (529s)
— with different companies
or brokers.
Some funds calculate eligibility based on
a household's combined investments, while others base it
on an individual's personal holdings. You may be able to
include your spouse's or your children's investments to qualify
for a breakpoint. You may also be able to include your parents'
or grandparents' investments — even if they live at a separate
address.
Letter of intent
Even if your total holdings don't
meet a breakpoint, you may still qualify for a discount. Some
funds will let you sign a "letter of intent" indicating
the total amount you plan to invest over a specified period of
time. For instance, if you're investing $25,000 today in
a fund that has a $50,000 breakpoint, you may be eligible for
a discount on your current purchase if you sign a letter of intent
stating you'll buy an additional $25,000 worth of shares
within 12 months.
