What Is a Mutual Fund Load?

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A mutual fund load is the upfront or back-end costs charged to the investor when purchasing a mutual fund. Find out how mutual fund loads are used to pay the broker and the company with information from an investment manager in this free video on mutual funds.

Part of the Video Series: Stocks & Mutual Fund Investments
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Video Transcript

So what is a mutual fund load? A mutual fund load is the upfront cost or back end cost that will come with a mutual fund. A shares are an upfront fee and you can see anywhere up to five and three quarters percent for some mutual funds and those loads really are like a commission for the mutual fund company. That's their immediate profit that they're going to take. Some of that goes to a broker, some of that will go to the company and it is the upfront cost. There are BNC shares where you will have the load taken out on the back end and you'll have the load taken as a lesser percentage but if you've held the mutual fund for a period of time, the mutual fund will be worth more money perspectively. So that lower percentage in essence gives the issuer the same amount of payment. So looking for loads, look for A B or C shares, A shares will take the load on the frond end, C shares will take it on the back end, B shares sometimes will have a combination of both and may take the fees over a period of time. So be aware of the loads, read the prospectus and know what you're purchasing.

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