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What are Load Mutual Funds?

"Load" mutual funds are those which incorporate a front-end or back-end sales charge into their fee structure. This sales charge is essentially a commission for the shares purchased, which could either be a percentage of your investment amount or a flat fee, depending on the provider of the mutual fund. While all mutual funds incur expenses, it's crucial to note that not all of them include loads.

The Different Load Structures: Front-end, Back-end and Level Loads

Each mutual fund typically offers several classes of shares to investors, distinguished mainly by their fee structures. The three primary load structures are front-end, back-end, and level loads.

Front-end Loads

Front-end loads or Class A shares require the investor to pay a single charge when purchasing shares of the fund. This charge is deducted from your initial investment and can be up to 5%. Essentially, this is a cost that you pay upfront. A-shares and Investor Class shares offer breakpoint sales charge reductions, meaning that the more you invest within the fund family, the lesser the load you pay.

Back-end Loads

Back-end load funds, also known as Class B shares, impose a fee when you sell or redeem your mutual fund shares. Officially referred to as contingent deferred sales charges (CDSC), these reduce the investor's net if the shares are sold within a specific timeframe. Despite their higher annual fees, B shares can automatically convert to A shares over time, thereby enjoying lower annual fees.

Level Load Funds

Level load funds, also known as Class C shares, involve yearly charges. These fixed percentages are taken from the fund's assets and are part of expenses, albeit also serving as a type of load known as asset-based fees or 12b-1 fees. These fees assist the fund company in covering costs for marketing and materials, as well as distribution costs, which may include a small amount of broker compensation.

Special Share Classes: Institutional Investment Packages

Beyond the traditional load structures, there are other share classes typically part of institutional level investment packages. These classes, labeled with names such as R1, have unique fee structures. While they do not have loads in the conventional sense, the plan design may transfer fees to the investors in other forms

Understanding the fee structures of mutual funds, including load funds, is a critical aspect of making informed investment decisions. Keep in mind that loads are only one of the fees impacting mutual fund investors. As these costs are deducted from the fund's assets, they can reduce the returns distributed to the investor. Thus, always consider the fee structure when evaluating a mutual fund, ensuring it aligns with your investment goals and risk tolerance.


“Load” mutual funds are those which have a fee structure that includes a front-end or back-end sales charge. All funds have expenses, but not all funds have loads.

Loads are sales charges that are part of the fee structure of a mutual fund. Each mutual fund will typically offer a few types of shares classes to its investors, and the main difference between the share classes are their fee structures. There are front-end loads, which come out of your initial investment and can be up to 5%.

These are part of A-Shares and Investor Class Shares, and these fund classes will typically have lower fees after the initial year than other share classes. Investor class shares are basically A-shares but with a lower initial investment amount required.

A-shares and Investor Class shares will offer breakpoint sales charge reductions, so if you invest enough within the fund family, you will play a lesser load, or potentially no front-end load at all.

There are also back-end loads, officially called contingent deferred sales charges (CDSC), which reduce the investor’s net if he or she sells the shares within a certain number of years.

These are typically built into B shares and C shares. C shares do have the option to charge a small front-end sales load, but this is not entirely common. B shares and C shares have higher annual fees taken out than A shares, but B shares will generally convert automatically to A shares after a time and enjoy their lower annual fees.

The annual fees that depend on the class-type are part of expenses but they are also a form of load known as asset-based fees or 12b-1 fees, named after the regulation that governs their use. They help the fund company pay for marketing and materials, as well as distribution costs which may include a small amount of broker compensation, like a residual commission.

There are other share classes which are generally part of institutional level investment packages that are redistributed to the investor in shares that are labeled with a wide variety of names, such as R1, and have fee structures unique to that arrangement.

These might be found in a 401(K) plan, for example. These share classes do not have loads in the conventional sense, but the plan design may have passed fees on to the investors in another form.

What are No-Load Mutual Funds?
What are the Expenses Associated with Buying and Owning Mutual Funds?

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