What distinguishes multi-class funds from traditional funds?

Multi-class funds are designed to provide investors with different investment options that cater to varying preferences, which distinguishes them from traditional funds. One of the key features of multi-class funds is that they are structured to offer different classes of shares with varying fee structures, distribution methods, and investment strategies. This means that within a single fund, investors can choose to invest in different securities or strategies depending on their risk tolerance, investment goals, or cost considerations.

This flexibility allows investors to have a more tailored investment approach. For instance, some classes may focus on equity investments, while others could focus on fixed-income securities, or a mix of both, which isn't typically offered in a traditional fund that might adhere to a single strategy.

The other options refer to characteristics that do not accurately depict the nature of multi-class funds. For instance, lower fees are not an inherent trait of multi-class funds, as fees can vary significantly between different classes. Additionally, these funds usually do not restrict themselves to a single security type, nor are they defined by a lack of active management. In fact, many multi-class funds can be actively managed to achieve their investment objectives while providing flexibility to the investor.