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Investment Dictionary


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Front-End Load

 

Front-end load (sales fee) was a very popular load fee in investment market for decades. This fee is paid by investors during the acquisition of mutual fund units and is some percentage (0%-5%) on the invested amount. 

 

Usually front-end load is paid not to the fund manager but to the intermediaries who are distributing these mutual funds. This fee evolved when the financial markets weren’t as much efficient as they are now. People where simply buying funds that were introduced to them trough large brokerage networks which had high cost and needed to be funded. 

 

However, any investment fees and charges are direct expenses of the investor, and it is natural that every investor is trying to avoid such costs if possible. Current computerization and increase effectiveness of the investment market allows that, and 'front-end load' fees are vanishing rapidly while no-load funds are gaining the popularity. It is just a question of time when ‘sales fee’ will become a history. 

 

Another similar charge is 'back-end load' which is paid when investor is selling his mutual fund and depends on the investing period.

 






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