What Does Front-End Load Mean?
A commission or sales charge applied at the time of the initial purchase for an investment instrument, usually a mutual fund or insurance policy. The load is deducted from the investment amount, which reduces the actual amount invested. Investopedia explains Front-End Load Front-end loads are paid to investment intermediaries (financial planners, brokers, investment advisors) as sales commissions. Thus, these sales charges are not part of a mutual fund’s operating expenses. It is argued that a load is a cost that investors incur for obtaining an investment intermediary’s expertise in selecting appropriate funds for clients. It is a matter of record that load funds do not outperform no-load funds. Generally, the sales charge on a load mutual fund will be waived if such a fund is included as an investment option in a retirement plan such as a 401(k).
