contingent deferred sales charge

(redirected from Back-End Loads)

Contingent deferred sales charge (CDSC)

The formal name for the load of a back-end load fund.

Contingent Deferred Sales Charge

The formal name for the load in a back-end load fund. A CDSC is the fee paid when a shareholder sells shares in a mutual fund within a certain number of years. That is, 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 CDSC usually declines by the year until the maximum number of years is reached. See also: B-share.

contingent deferred sales charge

A mutual fund redemption fee that is reduced or eliminated for specified holding periods. For example, a fund might charge a 6% redemption fee for a holding period of less than one year, a 5% fee for a holding period of one to two years, and so forth. Mutual funds with a contingent deferred sales charge also generally levy an annual 12b-1 fee.
References in periodicals archive ?
use of back-end loads (surrender charges) that phase out over time rather than the front-end loads typical of other types of policies;
In addition, each participant or beneficiary must be provided with a statement explaining any fees and expenses that can be charged on an individual basis (as opposed to a plan-wide basis) and that are not reflected in each DIA's total annual operating expenses, such as fees for processing plan loans or qualified domestic relations orders; fees for investment advice; fees for brokerage windows; commissions or front-end or back-end loads or sales charges; and redemption fees.
Through Mutual Solutions, front-end and back-end loads of recommended funds are waived.
Many in the mutual fund industry feel both front- and back-end loads keep investors disciplined, and prevent them from shuffling money in and out of the market.
Some providers aggressively pursue the small business market and waive all front- and back-end loads when annual contributions are expected to be greater than a minimum amount ($50,000).
B shares have back-end loads or contingent deferred sales charges (CDSC).
Back-end loads or contingent deferred sales loads (CDSL) are sometimes used in junction with 12b-1 fees as an alternative to front-end sales loads (12b-1 fees are those that can be assessed against fund assets to recover distribution expenses of the fund).
Some insurance products--particularly universal-life policies--carry surrender charges or back-end loads.
These fees, unlike back-end loads, are paid directly to the funds to help defray transaction costs.
There are no commissions, front- or back-end loads, or surrender penalties.
explains the differences between front-end and back-end loads when investing in mutual funds.