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Quick Answer: What is a load on a fund?

A load fund is a mutual fund that comes with a sales charge or commission. The load is either paid upfront at the time of purchase (front-end load), when the shares are sold (back-end load), or as long as the fund is held by the investor (level-load).
A “load” is a charge by a mutual fundfor the buying and selling of shares that are allocated to an intermediary such as a broker,advisor,or another type of professional. A no-load fund is a fund that does not charge a sales load fee.

What is an advantage of buying a load fund?

Although load funds charge a commission, they are still preferred by some investors over no-load funds. Investors pay a commission to the financial intermediary that conducts research on the most appropriate mutual fund to invest in and makes an investment decision on behalf of the client.

How does a load fund work?

A load mutual fund charges you a sales charge or commission for the shares purchased. Front-end loads, also called Class A shares, is a single charge paid by the investor when they purchase shares of the fund. Back-end load, or Class B shares, charge a one-time fee paid when you redeem or sell, your mutual fund shares.

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What is an disadvantage of buying a load fund?

The main disadvantage of a load fund is the attached charges and commissions. These charges can be substantial, depending on the size and type of investment, and other factors. The costs diminish your investing power as they are deducted from your investment funds.

How are load funds calculated?

The loading charge is stated as a percentage of the offer price, which is different than the actual value of the share. The offer price is calculated as the NAV divided by one minus the load. It’s easiest to show with an example. The offer price is calculated so that what remains after the fee is paid is the NAV.

Do load funds perform better than no load funds?

No-load mutual funds have no or low fees while load funds have a sales charge or commission attached. Some studies show that no-load funds outperform load mutual funds. If you don’t trust your own judgment or have an existing relationship with a financial professional, you may want to consider load funds.

What is load fee?

A load is a sales charge or commission charged to an investor when buying or redeeming shares in a mutual fund. Common types of sales charges include front-end loads and back-end loads. Funds with loads may be contrasted with no-load mutual funds.

Who pays the load fee for a load fund purchase?

Difference Between Load And No Load Mutual Funds Load Mutual Fund: In case of a load mutual fund, an investor is charged on the purchase of shares along with the initial sales fee. This charge can be from 1% to 8% of the total amount they are investing.

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What does load waived mean?

Key Takeaways. Load-waived funds are mutual funds that would normally charge certain fees, as do loaded funds, but instead don’t require investors to pay those expenses.

How do no load mutual funds work?

A no-load fund is a mutual fund in which shares are sold without a commission or sales charge. No-load funds are possible because the shares are distributed directly by the investment company, instead of going through a secondary party.

What is best for most investors load or no-load funds?

You should generally buy no-load funds if you don’t use an advisor, but perhaps the most important reason for buying no-loads is to boost your returns by minimizing expenses. In most cases, no-load funds have lower average expense ratios than load funds, and lower expenses generally translate into higher returns.

Is Fidelity a no-load fund?

Fidelity is one of the largest financial corporations in the world, and while some of its funds are loaded, it also has a wide range of no-load mutual funds and ETFs.

Who gets the load on a mutual fund?

A load fund is a mutual fund that comes with a sales charge or commission. The fund investor pays the load, which goes to compensate a sales intermediary, such as a broker, financial planner, or investment advisor, for his time and expertise in selecting an appropriate fund for the investor.

What is the percentage load fee?

Front-end loads are assessed as a percentage of the total investment or premium paid into a mutual fund, annuity, or life insurance contract. The percentage paid for the front-end load varies among investment companies but typically falls within a range of 3.75% to 5.75%.

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What does load percentage mean?

A load is a fee paid to purchase or sell a specific investment. It is expressed as a percentage of the amount invested. The term is most often used when discussing mutual funds.

What is transaction fee load?

Load funds: A mutual fund’s sales load (also known as a sales charge) is a fee charged on the purchase or sale of fund shares. The fee is charged as a percentage of the fund’s offering price (price to buy shares). You do not pay a transaction fee to Fidelity. Loads are described in the fund’s prospectus.

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