Multi-Class Risk [Investment] Law and Legal Definition
A mutual fund that is part of a mutual fund corporation that also offers other mutual funds has an additional risk. Each mutual fund within the mutual fund corporation has its own investment objective and own fees and expenses, which are tracked separately. However, there is a risk that the expenses or liabilities of one mutual fund may affect the value of the other mutual funds within the same mutual fund corporation. If one mutual fund is unable to pay its expenses, the mutual fund corporation as a whole is legally responsible for covering the shortfall. Moreover, the tax consequences of an investment in a mutual fund will depend in part on the tax position of the mutual fund corporation as a whole and will differ from an investment in a mutual fund that is not part of a multi-class structure.