Friday, December 24, 2010

Load

The term Load refers to sales fees. Funds may charge a front-end load and/or a back-end load. These are characterized as sales fees, and generally much of the proceeds of these fees are paid to advisers/brokers/salespeople in the form of commissions to incentivise sales. Generally it's best to avoid funds that charge high loads, because of the degenerative effect it has on investment returns and wealth building. For example a fund with a 5% front-end load would reduced your initial investment from say $10,000 to $9,500 from day one, thus you would need to be confident that the fund manager would generate returns sufficient to compensate for this, or at least provide ancillary services or benefits to justify the cost.

Synonyms: Front-end load, Back-end load, Sales fee, Exit fee, Application fee
 
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