The ABCs of mutual fund series

To Michael Jackson, A B C was easy as 1 2 3, as simple as, do re mi – but when it comes to mutual fund series, the letters investors need to be paying attention to should be A, F and D.

That’s because before you select your mutual funds, it’s important that you understand the series that you are purchasing.

Different series have different fund expenses, which can impact your overall returns.

Let’s take a look at the three most common mutual share series: A, F and D

Series A Mutual Funds

A = Advisory fee

This is the mutual fund series that investment advisors will often offer, ideally based on the best investment strategy for your portfolio.

With a series A mutual fund, the advisor is paid a trailer fee. This fee is normally expressed as a percentage or basis points and can vary between 50 and 75 basis points. The actual percentage you pay will depend on the fund company offering. It will be detailed in the fund’s prospectus but is embedded as part of the management fee.

Investors often balk at paying fees, but it’s important to remember that you tend to get what you pay for: A good advisor has your best interest in mind and should be paid for his or her expertise.

You should beware, however, of any advisor who seems to only suggest funds with high fees, regardless of their suitability based on your goals and risk tolerance.

Series D Mutual Funds

D = Discounted fee

Not all D series mutual funds are the same.  However, you do pay lower management fees with this mutual fund series overall because the trailer fee is lower.

A D series mutual fund can pay a trailer fee of 10 basis points, for instance, compared with the 50 to 75 basis points you’d pay in series A.

These types of mutual funds are often offered by discount brokerages.

Series F Mutual Funds

F = Free  (no trailer fee)

This series of mutual fund is good for investors with a discretionary account or those who’ve opted for a fee-based advisor or investment professional and want to avoid paying the advisor fees twice.

At the end of the day, the important thing to look at is the total fee being paid.

If you want to see how all this plays out, you can check out various fee scenarios at

1 year ago