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 ?
associated with higher front-end loads. Funds charge front-end loads
With 4.5 percent front-end load, 0.6 percent expense ratio.
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.
In a survey of expense charges of annuity contracts offered by 32 insurance companies, only 7 contracts, or about 22%, imposed a front-end load. In all cases, those that did not impose a front-end load imposed a surrender charge.
In 1993, in an effort to limit marketing deception relating to fund costs, the NASD issued a rule (125) barring sales representatives or their firms from representing a mutual fund as ""no load' or as having "no sales charge' if the" fund imposes a front-end load, a redemption fee or a CDSC, or a 12b-1 fee exceeding 0.25% of average net assets per year.
The ICI claimed that "[t]he substitution of 12b-1 fees for front-end loads contributed significantly to the substantial reduction over the past two decades in the cost of purchasing bond and equity funds." (224) Like virtually all of Rule 12b-1's folklore, however, on close inspection this contention fails.
Mutual funds have come a long ways from the days when they were available in only two flavors: no-load and front-end load."
Investors pay no front-end load for subscription on the Frankfurt Stock Exchange nor are any exchange fees charged.
It has been estimated that the amount of 12b-1 fees paid by investors was more than triple the front-end load payments made in 2002.
FGDAX has a front-end load of 5.75% and its annual expenses are 1.19%.
On a sales-weighted basis, "investors buying front-end load shares in those years outperformed the average for share classes in the same Morningstar category by 27 basis points," Schott Stevens wrote, while "similarly, publicly available data show that investors concentrate their purchases in front-end load share classes with lower expense ratios and pay brokers lower-than-average loads -- further contradicting the Department's claims of harm to retirement savers."
Weiss Ratings looked for variable annuities with no initial sales charge also known as a front-end load, below average costs, a wide selection of mutual fund subaccounts with good performance, issued by insurance companies with a Weiss Financial Strength Rating of A (excellent), B (good) or C (fair).