Load Fund Law and Legal Definition
Load fund is a mutual fund that charges a commission either when shares are purchased or when they are redeemed. It is a mutual fund that is sold for a sales charge by a brokerage firm or other sales representative. This sales charge may range from 3% to as high as 8% of the full purchase.
Load fund may be stock, bond, or commodity fund, with conservative or aggressive objectives. The advantage of a load fund is that the salesperson will explain the fund to the customer, and advise him/her when it is appropriate to sell the fund, as well as when to buy more shares.
Load-funds have front-end or back-end loads. Front-end loads are amount deducted from early payments made to a mutual fund purchase that covers expenses such as sales commissions. Back-end loads are sales charge that investors pay when selling mutual fund shares within a specified number of years.
