Definition of Y-Share

Classes of mutual funds shares are denoted by alphabetical names, A and B being the most common ones for referring to individual investors. Also each class has different sales load and commission structure. Institutional investors are offered only mutual funds shares of Class Y. Purchase size should be $500,000 or more. . A retail investor would be unable to purchase this class of shares.

Explanation of Y-Share

Y share lacks front-end or back-end sales load or commission. And also are not charged marketing expense fee.

Effects

Y shares less fee allows to have higher net returns than any other class of shares. 12b-1 fees for retail mutual funds range from 0.25 percent to more than 1 percent per year, reducing the returns of Class A, B and C shares compared to Y shares.

Considerations

Large institutional investors like corporate or government pension plans and private equity funds are sellers of Y shares.

Potential

If a retail investor purchases “funds of funds” only then can access Y share funds. These are mutual funds that invest in selected other mutual funds. The fund of funds hold Y shares in the selected funds to hold down the overall expense ratio.