Back-End Load

AAA

DEFINITION of 'Back-End Load'

A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.

Also known as a "contingent deferred sales charge or load."

INVESTOPEDIA EXPLAINS 'Back-End Load'

The back-end load is a type of sales charge that is used with mutual funds that have share classes, which in this case are identified as Class-B shares. Class-A shares charge a front-end load, which is taken from an investor's initial investment. Class-C shares are considered to be a type of level-load fund - no front-end and low back-end loads, but the fund's operating expenses are high. In all cases, the load is paid to a financial intermediary, and is not included in a fund's operating expenses.

In essence, funds with share classes carry sales charges (as opposed to no-load funds). The class you choose is what determines how much and when you pay. In employer-sponsored retirement plans, the loads are generally waived.

RELATED TERMS
  1. Load-Adjusted Return

    A load-adjusted return is how much of a return an investor actually ...
  2. Contingent Deferred Sales Charge ...

    A fee (sales charge or load) that mutual fund investors pay when ...
  3. Exchange Privilege

    The opportunity given to mutual fund shareholders to exchange ...
  4. Front-End Load

    A commission or sales charge applied at the time of the initial ...
  5. Load Fund

    A mutual fund that comes with a sales charge or commission. The ...
  6. Breakpoint

    For load mutual funds, the dollar amount for the purchase of ...
Related Articles
  1. Are Mutual Funds Doomed?
    Mutual Funds & ETFs

    Are Mutual Funds Doomed?

  2. How To Pick A Good Mutual Fund
    Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

  3. January: Time To Read Your Mutual Fund's ...
    Mutual Funds & ETFs

    January: Time To Read Your Mutual Fund's ...

  4. Digging Deeper: The Mutual Fund Prospectus
    Mutual Funds & ETFs

    Digging Deeper: The Mutual Fund Prospectus

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center