Level Load

AAA

DEFINITION of 'Level Load'

An annual charge deducted from an investor's mutual fund assets to pay for distribution and marketing costs for as long as the investor holds the fund. For the most part, this fee is paid to intermediaries for selling a fund's shares to the retail public.

Also known as a "12b-1 fee".

INVESTOPEDIA EXPLAINS 'Level Load'

Unlike the one-time front-end (Class A shares) or back-end (Class B shares) loads, level loads (Class C shares) are applied annually as a fixed percentage of a mutual fund's average net assets. Also, unlike front-end and back-end sales charges, these 12b-1 fees are included in a fund's operating expenses.

While the load percentage doesn't change, if the net asset value of the fund increases through capital appreciation, the dollar value of the load will actually become more expensive and continuously erode the fund's return.

Total 12b-1 fees are capped by law at 1%. Generally, this fee will be pegged at 0.25%, which allows funds that don't exceed this percentage to be classified as no-load funds. This bit of magic, as well as the dubious necessity for the 12b-1 in a robust mutual fund environment, has put the justification for continued use of level load under considerable consumer and regulatory scrutiny.

RELATED TERMS
  1. Costs And Expenses

    As related to mutual funds, it is one of the principal criteria ...
  2. Load

    A sales charge or commission charged to an investor when buying ...
  3. 12B-1 Fee

    An annual marketing or distribution fee on a mutual fund. The ...
  4. Back-End Load

    A fee (sales charge or load) that investors pay when selling ...
  5. Front-End Load

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

    A mutual fund that comes with a sales charge or commission. The ...
Related Articles
  1. Mutual Funds & ETFs

    The Lowdown On No-Load Mutual Funds

    These funds let you cut out the middleman - and the fees.
  2. Retirement

    The ABCs Of Mutual Fund Classes

    Do you understand how the various types of shares differ? We give you the pros and cons of each.
  3. Investing

    What's the difference between a load and no-load mutual fund?

    A mutual fund is simply a large group of people who lump their money together for a management company to invest. And, like most things in life, there are fees and commissions involved. Mutual ...
  4. Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  5. Pimco has stabilized its Total Return fund, but its returns are still shaky and its sales load is still a fat one.
    Professionals

    A Look At Pimco's Total Return Fund Post-Gross

    Pimco has stabilized its Total Return fund, but its returns are still shaky and its sales load is still a fat one.
  6. 10 equity mutual funds bargains for any investor or financial advisor.
    Professionals

    10 Equity Mutual Fund Bargains

    10 equity mutual funds bargains for any investor or financial advisor.
  7. Investing Basics

    Online Portfolio Management, DIY or Fee-Based Financial Advisor: Which Is Right For You?

    Should you use an online financial planning service, or do professional, fee-based financial planners justify their higher costs?
  8. Chart Advisor

    A Total Stock Market ETF For Any Portfolio

    Utilizing index funds and ETFs, such as Vanguard's VTI, is one of the best ways for the average investor to track the broad markets and minimize fees.
  9. Trading Strategies

    What's the safest way to invest in high-yielding dividend stocks?

    Learn about some of the most important safety factors that you need to consider before you invest in high-yielding dividend stocks.
  10. Africa's economic growth and growing stability has gotten the attention of adventurous investors. What kind of ETF or mutual fund options are available?
    Mutual Funds & ETFs

    Destination Africa: These Funds Offer Easy Access

    Africa's economic growth and growing stability has gotten the attention of adventurous investors. What kind of ETF or mutual fund options are available?

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center