Back-end load fund

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Back-end load fund

A mutual fund that charges investors a fee to sell (redeem) shares, often ranging from 4% to 6%. Some back-end load funds impose a full commission if the shares are redeemed within a designated length of time, such as one year. The commission decreases, the longer the investor holds the shares. The formal name for the back-end load is the contingent deferred sales charge, or CDSC

Back-End Load Fund

A mutual fund with a load that is paid when the shareholder sells his/her shares. That is, a back-end load fund carries a sales fee that a shareholder only pays when he/she sells shares in that mutual fund within a certain number of years. When an investor initially buys a share in a back-end load fund, he/she agrees to pay a third party (usually a financial institution or broker) a certain percentage of the share's value if he/she decides to sell it within five to 10 years, depending on the specific nature of the agreement. The amount of the load usually declines by the year until the maximum number of years is reached. See also: B-share.
References in periodicals archive ?
Today, an investor who buys a load fund has to decide among front-end load funds, back-end load funds, funds with 12b-1 fees, funds with 12b-1 fees and declining redemption fees and so forth.
In comparing traditional front-end (imposed upon the original investment) and back-end load funds (imposed upon the redemption market value), one fact should be remembered.