Load (Mutual Fund)
Sales commission charged when buying (front-load) or selling (back-load) a mutual fund. Avoid—buy no-load index funds instead.
What You Need to Know
Load is a sales commission on mutual funds, ranging from 3-8.5% of your investment. This fee goes to the broker or advisor who sold you the fund, not the fund company.
Types of loads:
- Front-load: Charged when buying. $10,000 with 5% front-load = $9,500 actually invested, $500 to broker.
- Back-load (Deferred Sales Charge): Charged when selling, often 5% declining to 0% over 5-7 years.
- Level-load: Ongoing annual fee (often 0.25-1%) instead of upfront charge.
Math: $10,000 in front-load fund (5% load + 1% expense ratio) vs no-load index (0.05% expense ratio) = $90,000+ difference over 30 years at 7% returns.
Always choose no-load mutual funds or ETFs. Vanguard, Fidelity, and Schwab offer thousands of no-load options. Loads don't improve performance—they're pure cost to you.
Sources & References
This information is sourced from authoritative government and academic institutions:
- investor.gov
https://www.investor.gov/introduction-investing/investing-basics/glossary/load
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Related Terms in Investment
12b-1 Fee
Hidden mutual fund fee (0.25-1% annually) for marketing and distribution. Comes out of your returns. Avoid funds with high 12b-1 fees.
AUM (Assets Under Management)
Total market value of investments managed by an advisor or fund. Used to calculate 1% annual advisor fees—$500K AUM = $5K/year.
Alpha
Excess return above benchmark. Positive alpha = beat the market. Most actively managed funds have negative alpha after fees.
Bear Market
20%+ sustained market decline from recent peak. Characterized by fear, pessimism, and falling prices. Buying opportunity for long-term investors.
Beta
Volatility compared to market. Beta of 1.0 = moves with market. Beta of 1.5 = 50% more volatile. Measures risk, not return.
Bull Market
20%+ sustained market rise from recent low. Characterized by optimism, economic growth, and rising prices. Opposite of bear market.