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Front End Loads

"Load" is industry terminology for the fee applied to the sale of shares in a mutual fund. Not all funds carry these fees and when they are present they are often collected in different ways. Some funds charge what is referred to as a "front end load" meaning that at the time of the sale the fee is applied directly. Typically the rate for this up front method of fee collection is from three to 8.5 percent.

The "load" may also be applied on the back end of the purchase. A typical arrangement for a back end load is for the fee to be collected in full as an exit penalty if the shareholder sells their holdings in the fund within the first year. In this arrangement the load will be reduced each year the shares are held and if the investor does not sell for a period of approximately six years, the load will disappear. In the case of a so-called "level load" a fee of one percent is charged for each year the investor holds shares in the fund.

More Glossary Terms Explained here


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