Front-End Load

AAA

DEFINITION of 'Front-End Load'

A commission or sales charge applied at the time of the initial purchase for an investment, usually mutual funds and insurance policies. It is deducted from the investment amount and, as a result, it lowers the size of the investment.

INVESTOPEDIA EXPLAINS 'Front-End Load'

Front-end loads are paid to investment intermediaries (financial planners, brokers, investment advisors) as sales commissions. As such, 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
  1. Mutual Fund Wrap

    Also known as a mutual fund advisory program or a wrap account, ...
  2. No-Load Fund

    A mutual fund in which shares are sold without a commission or ...
  3. Breakpoint

    For load mutual funds, the dollar amount for the purchase of ...
  4. Incubated Fund

    A fund that is offered privately when it is first created. Investors ...
  5. Investor Shares

    Mutual fund shares purchased by individual investors as opposed ...
  6. Service Shares

    Mutual fund units that charge service fees to their shareholders. ...
Related Articles
  1. How To Pick A Good Mutual Fund
    Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

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

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

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

    Digging Deeper: The Mutual Fund Prospectus

  4. Where do I look for fees that I am charged ...
    Investing

    Where do I look for fees that I am charged ...

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center