Level Load


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".


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.

  1. Costs And Expenses

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

    A fee (sales charge or load) that investors pay when selling ...
  3. No-Load Fund

    A mutual fund in which shares are sold without a commission or ...
  4. Front-End Load

    A commission or sales charge applied at the time of the initial ...
  5. 12B-1 Fee

    An annual marketing or distribution fee on a mutual fund. The ...
  6. Load Fund

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