Reclassification
The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. Investopedia Says:
Sometimes mutual fund companies will decide to issue more than one series of similar mutual funds. Each series has different features and durations, and when the restrictions expire, they become reclassified to the fund with no restrictions.
Suppose the a company issues 2 mutual funds. Fund A is a no load fund, while fund B is a 5 year back-end load fund. After 5 years, when there is no longer a load structure, fund B will then be reclassified to fund A. Related Terms:
Back-End Load
Front-End Load
Mutual Fund
No Load |