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What are Z Shares?

Malcolm Tatum
Updated May 16, 2024
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The Z share is a form of mutual fund share that is of a class that may be acquired by persons who are in the employ of the institution that manages the mutual fund. Z shares may be provided to employees as part of the overall benefits of employment, or simply offered for purchase. There are a couple of reasons why Z shares can be advantageous for both the institution and the employee.

One of the obvious reasons why Z shares are helpful for the employee is that the shares allow the employee to build an investment portfolio within the perimeters of his or her circumstances. Z shares, when issued as a benefit of employment, can function as an effective way to help the employee prepare for retirement. The institution may choose to issue Z shares to the employee, based upon the amount of annual gross income, a merit system, or a combination of the two. In other instances, the institution may offer to match the Z shares purchased by the employee, up to a certain amount, each calendar year. For example, an employee may be able to purchase up to a thousand Z shares per year, with the employer supplying an additional thousand shares to the employee’s account.

From the perspective of the employer, Z shares are a great incentive to keep valuable employees around long term. When used as part of the basis for a retirement program, or as a means of helping the employee to cultivate additional financial security, Z shares help to establish strong ties between employee and employer. An employee who feels fairly compensated by an employer is likely to remain a part of the organization and be productive.

The advantage of providing Z shares to an employee can even go a little further. When the employee believes that he or she is not only fairly compensated but is perceived as being valued by the employer, there is additional incentive to remain with the company and continue to accrue the benefits of the business relationship. Businesses that hold on to employees over the long term benefit from the accumulated wealth of experience, spend less resources in training and education of new employees, and tend to be perceived as being stable by the wider business and consumer community.

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Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
By Mammmood — On Feb 09, 2012

@David09 - How would judge the effect on employee morale? Do you really think that an employee who is not properly compensated will stick around so that they can own class Z shares? Perhaps some will, but I think most won’t.

They’ll probably stay long enough until they can find a better job in my opinion. The way I see, salary is the biggest factor in retention, not ownership of mutual shares, Z or otherwise.

To me the Z shares are just gravy to a decent compensation package; they can’t improve upon a salary that’s on the low end.

By David09 — On Feb 09, 2012

I’d love to own Z shares. I’ve worked for many companies where owning corporation shares were part of the benefits package. But of course, your money is only going to one corporation in that case.

In one case, the company I worked for went bankrupt and all my shares were worthless. It didn’t matter that I had bought them at discounts available only to employees.

With Z shares, you’re buying mutual funds, which are diversified, by definition. So I think they are a better value to the employee than the individual stock shares. That doesn’t mean mutual funds are a slam dunk, by any stretch. If the money manager does a poor job, the fund can sink just like an individual stock can sink. Still, I think that it’s a better deal.

By indemnifyme — On Feb 08, 2012

This article brings up a really good point that Z invest shares could really boost the morale of a company. Obviously an employee that receives benefits like this will feel more valued and likely to keep their job.

I think it's kind of a win-win situation too, because the company is providing employees shares in its own mutual fund. I imagine this is more cost effective than providing your employees shares in an outside investment fund.

By Azuza — On Feb 08, 2012

@SZapper - You raise a good point. Having shares in a mutual fund you know is well ran is even better than having shares in some kind of random mutual fund. I suppose the opposite is true too though. If you work for a company that you don't think does a very good job, you're not going to feel like your Z shares are very valuable.

Anyway, I tend to look at things like this with rose colored glasses in that I kind of think it's great either way. I've never worked at a job that provided me with any kind of benefits like shares investment. I have invested in a mutual fund on my own though, and found it to be fairly profitable.

By SZapper — On Feb 07, 2012

Very interesting. I always wondered if employees of shares companies got to have free shares in the mutual funds. I think this is actually pretty awesome, because mutual funds have a history of performing well over a long period of time.

Shares in a mutual fund are a great way to plan for retirement, so it's great that some companies give them to their employees. I'm sure it's even better for the employees if the company is well ran. That way, the employees will believe in the company and be even happier with their Z shares.

By anon39361 — On Aug 01, 2009


I would like to know more about Z shares.

How does it work? What is the method valuation?

Is it salable in the open market?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
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