Load Fund

A Load Fund is a type of mutual fund that charges a fee, known as a “load,” when an investor buys or sells Shares. This fee is typically used to compensate brokers or Financial Advisors for their services in managing the fund. Load funds can have different structures: front-end loads are charged when purchasing Shares, while back-end loads are applied when selling Shares. Some funds may have a level load, which involves ongoing fees throughout the time an investor holds Shares.

For example, if an investor buys Shares in a front-end load fund with a 5% load and invests $10,000, they would pay $500 in fees, meaning only $9,500 would be invested in the fund. Conversely, a back-end load fund might charge a 5% fee if the investor sells within the first year, which would decrease over time.

Cases involving load funds can vary widely. An investor may choose a load fund for personalized service and investment advice from a broker. However, others might prefer no-load funds, which do not charge these fees, as they can result in higher overall Returns due to lower upfront costs. Investors should consider their financial goals, investment horizon, and the potential impact of these fees when selecting a fund.