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A load fund is a mutual fund that charges a sales fee, or "load," to investors either when they purchase shares (front-end load) or when they sell shares (back-end load). The load is typically used to compensate brokers or financial advisors who sell the fund. Front-end loads are deducted from the initial investment, while back-end loads are charged when investors redeem their shares. Load funds are common in the mutual fund industry, but they can reduce overall returns due to the associated fees.
An investor purchases shares in a mutual fund with a front-end load of 5%, meaning 5% of their initial investment is deducted as a sales fee.
• A mutual fund that charges a sales fee either at the time of purchase (front-end) or sale (back-end).
• Load fees compensate brokers or financial advisors.
• Reduces the overall return for investors due to the sales charges.
A front-end load is a sales fee charged when an investor purchases shares in a mutual fund, reducing the initial investment amount.
The sales fees associated with load funds reduce the overall returns for investors, as a portion of their investment goes toward commissions.
No-load funds do not charge sales fees, allowing investors to invest their full amount without deductions for broker commissions.
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