Front-end load

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Front-end load

The fee applied to an investment at the time of initial purchase, e.g., on a mutual fund purchased from a broker or mutual fund company.

Front-End Load

A sales fee in a mutual fund that one pays when one buys shares in the fund. That is, when an investor buys a share in a mutual fund with a front-end loan, he/she agrees to pay a third party, usually a financial institution or broker, a certain percentage of the share's value. Unlike back-end load, the shareholder does not pay the fee upon sale, but rather upon purchase. A share in a mutual fund with a front-end load is called an A-share. See also: B-Share, C-Share, No-Load Fund, CDSC.

front-end load

See load.

Front-end load.

The load, or sales charge, that you pay when you purchase shares of a mutual fund or annuity is called a front-end load. Some mutual funds identify shares purchased with a front-end load as Class A shares.

The drawback of a front-end load is that a portion of your investment pays the sales charge rather than being invested. However, the annual asset-based fees on Class A shares tend to be lower than on shares with back-end or level loads.

In addition, if you pay a front-end load, you may qualify for breakpoints, or reduced sales charges, if the assets in your account reach a certain milestone, such as $25,000.

References in periodicals archive ?
Traditional A shares purchased through a broker include an immediate fee called a front-end load (expressed as a percentage of the purchase) as well as management fees and ongoing fees for distribution expenses, called 12b-1 fees, Morningstar explained in its research.
Summary statistics for front-end loads appear in Panel B of Table 2.
One class might, for instance, involve a front-end load but no 12b-1 fee.
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.
The new "T" mutual fund share class "has a uniform front-end load and 12b-1 structure across fund families," Saxena said, noting that the share class was created by asset managers "specifically to make it easier for [brokerage firms] to offer mutual funds within commission-based transactional retirement accounts, within the constraints" of the BIC exemption.
On a sales-weighted basis, "investors buying front-end load shares in those years outperformed the average for share classes in the same Morningstar category by 27 basis points," Schott Stevens wrote, while "similarly, publicly available data show that investors concentrate their purchases in front-end load share classes with lower expense ratios and pay brokers lower-than-average loads -- further contradicting the Department's claims of harm to retirement savers.
In the United Kingdom, mutual funds organized as corporations charge significantly lower front-end loads than mutual funds not organized as corporations, after controlling for other factors.
You go from A-shares in a mutual fund with front-end loads and expense ratios and put it in an ETF pipe instead, which results in substantial cost savings for the end investor.
The vast majority of Wharton MBA students were unfamiliar with concepts such as expense ratios and front-end loads, and even when provided with fact sheets about such fees, only 6% of the students chose to invest in minimum-fee index funds.