A breakpoint is the level or amount of investment purchases that are necessary for the investors to earn a discounted sales fee. They are related to mutual funds. It depends on the structure of the mutual fund program, sometimes it is possible to achieve a breakpoint by a single large purchase, or other times a series of smaller purchases may result in reaching the purchase level cumulatively.
Front-end load
It is a part of the basic structure of most mutual fund programs that there is a charge when an investor opt to purchase shares. Usually this sales fee or charge is based on a percentage of the total purchase price that are associated with the transaction. It is usually known as a front-end load.
When does a breakpoint is reached?
When a certain dollar level is reached by a single purchase or an aggregate total of purchases within a given time frame, then it might be dictated by the terms of the fund that a reduction in the percentage that is charged as the sales fee is received by the investor. That is the particular dollar level that is considered to be the breakpoint.
