Load fund


Also found in: Dictionary.
Related to Load fund: No load fund

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:
ClassABC
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 ?
100% no-load funds shares are purchased at net asset value directly from the sponsoring fund organizations without marketing and sales charges, deferred sales charges, fixed redemption fees or 12b-1 fees, all of which are deducted from load fund investments solely to support sales and marketing, Straus says.
256) Rule 12b-1 thus has developed into a handy tool enabling load fund sponsors to exploit consumer ignorance.
Today, load fund shareholders face a variety of share class purchase possibilities when deciding how to invest.
Another important factor that the accountant must consider when advising clients on load fund purchases is the expected time frame of the investment.
I also demonstrate some key differences between load fund investors and no-load fund investors that may result from the presence or lack of a professional investment advisor.
The SEC's opposition to allowing fund assets to be used for distribution made more sense for the load funds then dominating the industry.
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 new capability to load funds to all participating Visa reloadable prepaid cards in Blackhawk Network alliance stores will make these products even more relevant to our customers' daily life.
Overall, they're cheaper than load funds, so called because they charge a broker's sales fee, or load.
Indeed, if one presumed benefit of distribution services is the selection of lower-cost index funds, one would expect no-load and load funds to have lower - not higher - operating expenses than true no-load funds.
Among all load funds, Class B investors suffer from the poorest cash flow timing, underperforming a buy-and-hold strategy by 2.