Definition of Z-Share

Z-Share are shares of mutual fund which the employees of that fund are permitted to own. The employees may themselves buy Z-shares or receive them as a reward or a compensation package. These are similar to stock option/grants for employees of the mutual fund organizations. Z-Shares are just like financial incentives or rewards given to employees as it can be sold at net asset value at any particular point in time. These are given to employee for motivating them and winning their loyalty.

Explanation of Z-Share

When fund companies are merging, Z-Share are created. Typically, Z-Shares are created as a result of fund companies merging. Suppose there is an organization A, it markets load funds.  There is another organization B and it markets no-load funds. Organization A takes over organization B. Now, organization B funds charge commissions and are part of organization A’s funds. For organization B, Z share classes are created. Another example is suppose Johnny works in the human resources department of the XYZ organization. As a part of his compensation package, XYZ gives him 150 options per year. These options let him purchase up to 150 shares of XYZ every year at a certain price.