Load fund

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Load fund

A mutual fund that sells shares with a sales charge-typically 4% to 8% of the net amount indicated. Some no-load funds also levy distribution fees permitted by Article 12b-1 of the Investment Company Act; these are typically 0. 25%. A true no-load fund has neither a sales charge nor a distribution fee.

Load Fund

A mutual fund that charges shareholders a sales charge or commission. The charge, or load, pays the person(s) who sold the investor shares in the fund. There are three types of load fund. A front-end load means that the shareholder pays the fee when buying into the fund, while a back-end load means that he/she pays when selling his/her shares. Finally, an investor with a level-load fund pays periodically throughout his/her time as a shareholder. Studies have shown that load funds perform neither better nor worse than no-load funds.

load fund

A mutual fund with shares sold at a price that includes a sales charge—typically 4 to 9.3% of the net amount invested. Thus, load funds are sold at a price exceeding net asset value, but they are redeemed at net asset value. There is no reason to expect an investment company with a sales charge to outperform one without a sales charge. See also load, low-load fund, no-load fund.
Case Study Mutual fund distributors sometimes offer two, three, or four classes of shares for the same fund. Fund classes differ with regard to the fees charged to investors who purchase and own the shares. Class A shares typically entail a sales charge that ranges between 3% and 6%, while class B shares for the same fund entail a higher annual fee plus a redemption charge, or exit fee, in place of an initial sales charge. The redemption fee generally declines the longer shares are held before being redeemed. A third class of mutual fund shares may have no sales or redemption charge, but entail a higher annual fee. One major brokerage firm offers an aggressive growth fund with the following charges:
Initial Sales ChargeUp to 5.00%, reduced for large purchases; no charge for purchases over $1 millionNone1.00%
Deferred Sales Charge1.00% on purchases over $1 million or more if redeemed within one year of purchaseUp to 5.00% with reduction over time; no deferred charge after six years1.00% if redeemed within one year
Annual Distribution Fee0.25% of average daily assets1.00% of average daily assets1.00% of average daily assets

Individuals who invest a substantial amount of money and expect a long holding period are generally better off choosing class A shares because the lower annual expenses will, over time, more than offset the initial sales charge. In addition, investors who purchase a substantial number of shares often qualify for a reduced sales charge. In summer 2001 one major brokerage firm instructed its brokers to limit sales of class B shares to clients who invested $100,000 or less.

Load fund.

Some mutual funds charge a load, or sales commission, when you buy or sell shares or, in some cases, each year you own the fund. The charge is generally figured as a percentage of your investment amount.

Most load funds are sold by brokers or other investment professionals. The sales charge compensates them for their time.

In contrast, no-load funds, which don't have sales charges but may levy other fees, are usually sold directly to the public by the investment company that offers the fund. Some companies offer both load and no-load versions of the same fund.

References in periodicals archive ?
Load funds, those that levy sales charges at the point of sale (resulting in less money being put to work as an investment), were encountering stiffer competition from no-load funds (which financed sales out of annually collected expenses), (84) and, as noted above, the fund industry was shrinking due to net redemptions.
The information on load is important, since I assume that load funds are accompanied by investment advice, and no-load funds are sold without advice.
To assist the accountant in this situation, we first review some common terminology used by load funds and then examine the financial implications of some of the investment decisions a load-fund investor may face.
Among all load funds, Class B investors suffer from the poorest cash flow timing, underperforming a buy-and-hold strategy by 2.
To appreciate the significance of the CDSCs' development and the competitive pressures CDSCs have exerted, it is necessary to understand how selling effort is compensated for load funds.
In these directors' eyes, and in the industry's eyes, the direct use of fund assets to pay distribution costs, a practice banned for the first 40 years following the Investment Company Act's enactment, has become essential if many load funds are to maintain "viable distribution systems.
Morris said further, "Since Moneytree customers can activate the basic card at no charge, and will not be required to pay any fees to load funds onto the card, we expect that a good percentage of Moneytree customers will choose to obtain a Cash Solution card.
With returns on fund investments likely to be single digits for the foreseeable future," Straus said, "investors need to understand that the sales and marketing fees charged by load funds can materially inhibit investment results.
today announced that the company will eliminate approximately 50 positions overall, including all of the positions in its division developed this year to market the PBHG Advisor load funds to brokers.
The Boost Mobile Prepaid Visa Card enables Boost customers to prepay or load funds onto their card that can be accessed for purchase of Re-Boost airtime, in addition to other goods and services.
These additions will enable Morgan Beaumont to continue to improve its proprietary technology platform, which allows stored value and debit cardholders to load funds securely and instantly across a national network of load locations.
Besides, there's no solid evidence that no-load funds, numbered at 1,193, underperform the more costly 1,885 load funds out there.