Investor Facts: What Is A Load?

Posted on February 11, 2019 at 7:59 AM PDT by

A load in the investment sense is a charge an investor pays when buying a financial product, usually as a mutual fund.

Mutual fund providers rely on salespersons to attract investors to the fund. These salespersons typically are financial advisors or stockbrokers.

The load is a charge that the investor pays at the point of purchase, money which goes to the sales intermediary.

The word load is thus used interchangeably with commission.

A front-end load is paid to the salesperson when the investor buys a fund. A back-end load is charged when the investor decides to leave the fund and get his or her money back.

Both types of commissions are based on a percentage of the investment, up to 1% of the total cash invested. However, these charges also can vary according to the amount invested.

For instance, the first $10,000 might face a load of 1%, while the next $50,000 invested might cost half as much, 0.50%, and so forth.

A back-end load might decrease over the time the investor stays in the fund, such that by the end of a few years the fee is much smaller than if the investor got out within 12 months.

Back-end loads thus encourage long-term investing, rather than speculating among funds in the short run.


Not all mutual funds charge commissions. If the investors buys the fund directly from the fund provider, he or she is typically buying a commission-free “no load” fund.

For instance, if you are a Fidelity or Vanguard client and buy a fund offered by those firms, you would not expect to pay a sales commission since no one acted as an advisor to convince you to buy the fund.

There’s nothing magical about load vs. no-load funds. If the investor feels confident in understanding the inner workings of a mutual fund, paying a load can be a waste of money.

However, some funds are difficult to buy directly and can have unusual or very specific investment objectives. The counsel of a qualified financial advisor could be worthwhile in those cases.

Loads should not be confused with ongoing fees charged by a mutual fund, such as 12b-1 fees. These are operating expenses and the money the investor pays got to the funds’ managers, not to a third-party salesperson.

MarketRiders, Inc. is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.