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LSDefine
Simple English definitions for legal terms
back-end load
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A quick definition of back-end load:
A back-end load is a fee charged by some mutual funds when investors sell their shares. This fee is usually a percentage of the amount being sold and is meant to discourage investors from selling their shares too quickly. It is important to understand the fees associated with a mutual fund before investing in it.
A more thorough explanation:
A back-end load is a type of commission charged by a mutual fund when an investor sells their shares. This fee is usually a percentage of the total amount being sold and is deducted from the investor's proceeds.
Let's say an investor buys $10,000 worth of shares in a mutual fund that has a 5% back-end load. If the investor decides to sell their shares a year later for $12,000, they would have to pay a $600 fee (5% of $12,000) to the mutual fund company.
This example illustrates how a back-end load can reduce an investor's returns when they sell their shares. It's important for investors to be aware of any fees associated with a mutual fund before investing.