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 ?
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.
Mutual funds that sell shares charging front-end loads usually offer discounts at certain pre-determined levels of investment, which are called breakpoints.
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 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.
The Task Force conducted an in-depth review of the financial industry's interaction with mutual fund customers, including processing of mutual fund share purchases with front-end loads, to fully understand why investors who purchased Class A shares of mutual funds did not always receive every available breakpoint discount.
During 2003 through May 2004, most mutual fund sales at Banorte Securities were in Class B shares, despite the fact that the low front-end loads available to the firm's customers meant that an investment in Class A shares generally yielded a higher return than a similar investment in the Class B shares.
With the implementation of Class C and D shares, Merrill Lynch now offers two classes with front-end loads and two types of contingent back-end, or deferred loads.
Fund shares are offered free of front-end loads and deferred sales charges.
A growing number of smaller, retail investors want to avoid front-end loads, and many larger clients want the lower fees offered to institutional investors but do not have a large enough asset base to qualify for a privately-managed account," she said.
Barnett also made substantial improvements to its Emerald mutual fund family, introducing a small capitalization fund and a "B" shares option which eliminates front-end loads, but features an exit fee that declines over time.
The self-assessment required firms that sold front-end load mutual funds to review their compliance in providing breakpoint discounts to customers during 2001 and 2002 and report those results to FINRA.