Front-End Load

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.

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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.

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Front-End Load

What Does Front-End Load Mean?

A commission or sales charge applied at the time of the initial purchase for an investment instrument, usually a mutual fund or insurance policy. The load is deducted from the investment amount, which reduces the actual amount invested.

Investopedia explains Front-End Load

Front-end loads are paid to investment intermediaries (financial planners, brokers, investment advisors) as sales commissions. Thus, these sales charges are not part of a mutual fund's operating expenses. It is argued that a load is a cost that investors incur for obtaining an investment intermediary's expertise in selecting appropriate funds for clients. It is a matter of record that load funds do not outperform no-load funds. Generally, the sales charge on a load mutual fund will be waived if such a fund is included as an investment option in a retirement plan such as a 401(k).

Related Terms:
• Closed-End Fund
• Load Fund
• Mutual Fund
• Net Asset Value—NAV
• No-Load Fund