The breakpoint schedule is designed to lower the sales charges associated with mutual fund investing. It encourages investors to commit more significant sums of money to a mutual fund, reducing the overall fees paid.  

This can be a helpful tool for investors looking to save on fees, but it’s important to remember that breakpoints are not always available. Also, to ensure they earn the maximum discount to which they are entitled, investors should try to have a comprehensive knowledge of a fund’s breakpoints and all requirements.  

Here we will look deeper into the concept of breakpoint.

What is a breakpoint?

The dollar amount required to buy shares in a loaded mutual fund that entitles the investor to a lower sales fee is known as the breakpoint. A breakpoint provides investors with a discount in exchange for making bigger bets.  

A lump sum payment or spaced installments over a specific period may be used to fund the purchase.  

Understanding breakpoint

A breakpoint is a specific level at which an investor becomes eligible for a discount on sales charges. For example, an investor who purchases $10,000 worth of shares in a mutual fund may pay a sales charge of 5%, but an investor who buys $100,000 worth of shares in the same fund may pay a sales charge of only 3%. 

Mutual fund companies set breakpoints to encourage more significant investments. By offering a discount on sales charges, mutual fund companies hope to encourage investors to make more effective investments, which can lead to higher profits for the company. 

 Breakpoints can be an excellent way for investors to save money, but it’s important to remember that not all mutual fund companies offer breakpoints. Some companies may have breakpoints that are difficult to reach, or they may not offer breakpoints at all. Before investing in a mutual fund, research the company to see if they provide breakpoints and how easy it is to reach them. 

What is the breakpoint for mutual funds?

The breakpoint for mutual funds is the minimum dollar amount that must be invested to receive certain pricing benefits. For example, a fund with a $5,000 breakpoint may offer a lower expense ratio to investors who invest at least $5,000. Breakpoints can also apply to sales charges, meaning that investors who invest above a certain amount may be eligible to pay a lower sales charge.  

Also, investors should be aware of breakpoints when considering mutual funds, as they can significantly impact the overall cost of investing.  

For example, an investor who is just below a breakpoint may be able to save money by increasing their investment to reach the breakpoint. However, investors should also be aware of potential pitfalls, such as getting hit with a front-end load if they redeem their shares early. 

How do you calculate breakpoint?


There are a few ways to calculate breakpoints for mutual funds. One method is to multiply the fund’s net asset value (NAV) and multiply it by the number of outstanding shares.  

This will give you the fund’s market value. The breakpoint is then calculated by dividing the market value by the number of outstanding shares. 

Remember to keep in mind a few things when calculating the breakpoint to buy shares in a loaded mutual fund.  

  • First, the breakpoint is the minimum amount of money required to invest in the fund.  
  • Second, the breakpoint is typically a percentage of the fund’s assets, so it’s important to know the value of the fund’s assets before calculating the breakpoint.  
  • Lastly, the breakpoint may differ for different investors, so it’s important to know what type of investor you are before calculating the breakpoint. 

Breakpoint examples

We know breakpoint is the minimum dollar amount an investor must commit to purchasing shares in a loaded mutual fund. The breakpoint schedule is designed to lower the sales charges associated with mutual fund investing.  

Assume you are an investor who bought $20,000 worth of shares in a mutual fund with a 5% sales charge and will pay $1,000 in fees.  

However, if you buy $100,000 worth of shares in the same mutual fund, you will only pay $4,000 in fees, a savings of $600.   

Frequently Asked Questions

Selling mutual fund shares at a price that is just below the level at which an investor would be eligible for a sale fee reduction is known as a breakpoint sale. A breakpoint sale is created with the intention of attempting to receive a higher commission. 

Breakpoint discounts are a legal way to sell mutual fund shares. However, not giving clients their discount is illegal. Additionally, it is against the law to intentionally sell shares at a loss in order to increase fees or commissions by a little margin. 

A breakpoint sell violation is when a broker sells a security at a price lower than the price specified in the customer’s order. This can happen if the broker misreads the order, if the security’s price drops suddenly, or if the customer changes the order. 

Breakpoint pricing or discounts are volume discounts in the front-end sales load paid by investors when they buy shares of Class A mutual funds. The money invested in a specific family of funds determines how much of a discount is offered. 

When you’re selling mutual funds, you may be able to take advantage of a breakpoint discount. This can happen when the fund’s sales charge is based on the number of shares you buy. If you buy a certain number of shares, you may be able to get a lower sales charge. This can save you money and make your investment more affordable. You’ll need to check with the fund company to find out if a breakpoint discount is available. 

Related Terms

    Read the Latest Market Journal

    Back in Business: The Return of IPOs & Top Traded Counters in March 2024

    Published on Apr 17, 2024 390 

    Start trading on POEMS! Open a free account here! At a glance: Major indices continue...

    Weekly Updates 15/4/24 – 19/4/24

    Published on Apr 15, 2024 66 

    This weekly update is designed to help you stay informed and relate economic and company...

    From $50 to $100: Unveiling the Impact of Inflation

    Published on Apr 12, 2024 147 

    In recent years, inflation has become a hot topic, evoking strong emotions as the cost...

    Japan’s Economic Resurgence: Unveiling the Tailwinds Behind Nikkei 225’s Record Leap

    Published on Apr 11, 2024 83 

    Source: eSignal, Intercontinental Exchange, Inc. In the heart of Japan’s economic landscape, the Nikkei 225...

    Weekly Updates 8/4/24 – 12/4/24

    Published on Apr 8, 2024 109 

      This weekly update is designed to help you stay informed and relate economic and...

    What Makes Forex Trading Attractive?

    Published on Apr 2, 2024 191 

    In a world where the click of a button can send goods across oceans and...

    Weekly Updates 1/4/24 – 5/4/24

    Published on Apr 1, 2024 98 

    This weekly update is designed to help you stay informed and relate economic and company...

    How to soar higher with Positive Carry!

    Published on Mar 28, 2024 137 

    As US Fed interest rates are predicted to rise 6 times this year, it’s best...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you


    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  


    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066