Fund share classes are confusing. Fund managers often fail to explain the purpose of each share class. A few simple rules of thumb can make it easier to make sense of fund share classes.

More choice is generally a good thing. But it can also leave us befuddled.

Open-end investment funds can have a plethora of different options. Each fund chooses the letters to represent different share classes.

The good news, though, is that each share class buys the same underlying fund. Each investment platform also tends to only have a one or two share classes available.

Deciding which fund share class to buy is therefore not as daunting as it first appears.

Some simple rules of thumb

A few rules of thumb when it comes to selecting share classes. The first is to buy the cheapest share class that is available. All of the share classes buy into the same underlying fund.