What are mutual fund A, B, and C share classes and which should I avoid?

Actively managed mutual funds sometimes sell the same portfolio in different share classes with different fee structures, mainly for funds sold through commissioned advisors. Class A shares charge an upfront sales load, a percentage skimmed off the top when you buy. Class B shares (now largely phased out) charged a back-end load if you sold early. Class C shares skip the upfront load but carry higher ongoing annual fees, including 12b-1 marketing fees, that quietly drag on returns for as long as you hold. For a do-it-yourself investor, the answer is usually to avoid all loaded share classes entirely and buy no-load index funds directly. If you must own a specific loaded fund, look for its institutional or no-load class through a discount broker to sidestep the sales charge.