front-end load

Front-End Load

A commission or sales fee charged at the time of the initial purchase for an investment, usually mutual funds and insurance policies. It is deducted from the investment amount and thus, lowers the size of the investment. For mutual funds, the use of loads is suggested to prevent frequent trading of the fund, which can hurt a fund if it has to hold large cash reserves to meet payouts.

Notes:

Loads are added to the net asset value of shares when the offering price is calculated. Remember, this fee is nothing more than a sales commission. Its supporters (who, strangely enough, are usually mutual fund salespeople) argue that a load is the price you pay for a broker's expertise in selecting the correct fund for you. Despite this reasoning, just about every study shows that load funds do not outperform no-load funds.

See also: Back-End Load, Commission, Exchange Privilege, Load Fund, Mutual Fund, No-Load Fund

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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.

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front-end load

See load.