Mutual Fund Back-End Loads
Mutual Fund Back-End Loads
Back-end loads are sales charges that are levied when you sell shares. Other names for these charges are redemption fees, exit fees, and contingent deferred sales charges.
Things To Know
- Back-end loads come into play when you sell shares.
Not all funds charge a fee for share redemption. Those that do, deduct the redemption fees from the proceeds of the sale. They are calculated on the amount sold. The redemption fee percentage may apply only to the value of the original purchase, excluding capital gains and reinvested dividends.
Some back-end loads decline over time
Many back-end loads come in the form of a contingent deferred sales charge. This is a sales charge that decreases over time. The longer the investor waits to redeem shares, the lower the sales load drops. In many instances, the sales load may eventually disappear. The slowly decreasing load is an incentive for investors to keep their money in the fund. Here is a typical contingent deferred sales charge table:
