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
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).