Fees, Commissions and Load Charges

The convenience of Mutual Funds is extremely attractive.  If everything goes well, you give them money, they grow your investment, and you focus on your daily routine.


But this convenience comes at a price.  After all, those investment professionals expect to get paid, not to mention all the other expenses.


One charge is called a "Front-End Load" or "Sales Charge".  This fee is taken when money is deposited.  For example if you invest $1,000 and there's a 5% load charge, your money will buy $950 worh of shares.


Other funds have a "Back-End Load".  With this arrangement, your initial $1,000 investment buys $1,000 worth of shares, but with a 5% load charge, when you sell $1,000 worth of shares, you'll receive $950.  Between the two, a Back-End Load is more desireable, as it means more money invested.


There's also "No Load" funds, which do not charge either type.  


In addition to load charges, there may be a variety of fees.  Some of these might include Exchange Fees (when an investor moves money between funds), a Management Fee (to cover administrative overhead), a Distribution Fee (to cover mailing of marketing and other materials).  There are other fees as well, so investors should always read the Fund Prospectus to see what types of charges apply.