Mutual funds normally have different share classes that investors can purchase. Some of these classes are differentiated by the load -- or upfront sales charge -- and annual fees that investors must pay. Others are differentiated by who can purchase them or how they can purchase them. T shares are one of the less common types and are used by different fund companies for different purposes.
The most common types of mutual fund shares are A, B and C classes. A shares are the most common and usually charge an upfront load when shares are purchased. In contrast, B shares usually charge their load when the shares are sold, and C shares may charge a small load or no load but have higher annual fees. Mutual fund companies can offer shares with just about any letter class, such as I shares for institutional investors or Z shares for the company's own employees.
Some T shares are similar to C shares, according to Bankrate.com, in that they may have little or no load but higher annual fees. This makes these types of shares more appropriate for short-term investors, since the longer an investor owns them, the more she pays in fees. Thus the designation as T shares may merely serve to distinguish a particular set of fee rules from those that apply to the more common C shares.
The Janus mutual fund company uses its T class in a different way, after a 2009 reorganization of its funds and shares. At Janus, the T shares represent an equivalent to the company's most common shares -- but sold through a third party, such as another investment company. The company's D shares are its most common shares and represent the class sold directly by Janus. If you want to invest in a Janus fund and contact Janus directly, you would purchase D shares; if you want to invest in a Janus fund through another management company, such as Oppenheimer or Fidelity, you would purchase T shares.
John Hancock also uses its T class for a specific purpose related to a reorganization. When the John Hancock Technology Fund became the John Hancock Rainier Growth Fund, shareholders in the Technology Fund received T shares in the Rainier Fund. These shares have both a front-end load and an annual fee. This distinguishes former shareholders in the Technology Fund from later investors in the Rainier Fund.
- Janus Capital Group: Janus Class J Shares Reorganization
- John Hancock Funds: Rainier Growth Fund
- Bankrate.com: The ABCs of Mutual Fund Fees
- SEC: Mutual Fund Classes
- CNN Money: What's Up With Share Class?
- U.S. Securities and Exchange Commission. "How to Read a Mutual Fund Prospectus (Part 3 of 3: Management, Shareholder Information, and Statement of Additional Information)." Accessed May 16, 2020.
- U.S. Securities and Exchange Commission. "How to Read a Mutual Fund Prospectus (Part 2 of 3: Fee Table and Performance)." Accessed May 16, 2020.
- U.S. Securities and Exchange Commission. "Mutual Fund Fees and Expenses." Accessed May 16, 2020.
- Internal Revenue Service. "Topic No. 409 Capital Gains and Losses." Accessed May 16, 2020.
- Internal Revenue Service. "Mutual Funds (Costs, Distributions, etc.)" Accessed May 16, 2020.
Eric Strauss spent 12 years as a newspaper copy editor, eventually serving as a deputy business editor at "The Star-Ledger" in New Jersey before transitioning into academic communications. His byline has appeared in several newspapers and websites. Strauss holds a B.A. in creative writing/professional writing and recently earned an M.A. in English literature.