See breakpoints. When brokers sell mutual funds, they charge different commissions based on how much you buy. For example, on a $25,000 sale and your commission might be 4%, but the commission rate on a sale of $100,000 might be 2%.
A "breakpoint sale" means brokers sell mutual funds at a dollar amount just under the breakpoint to earn a larger commission. So they might sell at $99,800 to help avoid that $100,000 breakpoint that would mean the lower 2% commission.
P.S. It's illegal.
Related or Semi-related Video
Finance: What is a Breakpoint?28 Views
Finance a la shmoop what is a break point?
well waltz into a store willing to buy a lot and you can usually expect a [Man in a store holding stack of cash]
discount or a freebie well the more you spend the more discounts stores are
usually willing to pile on keep you buy-in and it works the same way with
mutual funds buyers of mutual funds can get discounts once they get past break
points like the minimum level where certain discounts are activated go past
a certain break point and the commission on the buy might get slashed by a
percent go above another break point and the commission will go even lower or [Bar rises above break points]
disappear entirely..... buying shares of one-eyed man mutual fund company's
flagship fund might cost you commission of 5.5 percent if you buy
less than twenty five grand worth but if you buy five hundred thousand dollars
worth of that mutual fund well, then the commission might be just one percent
by over a million bucks and the commission might be free the broker will
be paid out of the management fee of the company over time ie one-eyed pays the
broker so yeah very important not to confuse a break point with this...That did [People watching Point Break movie]
not win the Academy Award
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