What is a Back-End Load?
A back-end load is a fee paid by holders of investments such as mutual funds or annuities. Investors pay this fee when they sell investments before a time prescribed by the fund or annuity has expired. The fee is activated if shares are sold within this time, usually five to ten years. This time range is called a holding period. Back-end loads are typically determined by calculating a percentage of the total amount of shares sold. The percentage is greatest after the first year and diminishes yearly until the end of the holding period. At the end of the holding period, the back-end load goes to a zero balance. Back-end loads are also referred to as a “contingent deferred sales charge,” “contingent deferred sales load,” or “redemption fee.” Investments which require a fee paid up front (i.e., a sales charge or a commission paid upon opening the account) do not usually require a back-end load as well. The shares in an investment such as a mutual fund may be designated by different classe
Sometimes referred to as a deferred sales charge or redemption fee, the back-end load is an example of a fee that is commonly incurred by investors. The back-end load is paid at the time that an investor chooses to withdraw a portion of the funds associated with an investment. Here is some information about how the back-end load is calculated. A back-end load is not always charged on every type of investment. Typically, investments that are structured to include the payment of an up front sales charge or a commission will not also be subject to back-end loads. Two examples of investments that usually do include back-end loads are mutual funds and annuity investments. Calculating the exact amount of back-end loads in a given situation involves several factors. First, there is the total amount of funds that are being withdrawn from the mutual fund or annuity. Second, there is the matter of how long the investment has been in place. Generally, the longer that the funds have been invested,
A “Back-End Load” is a fee that an investor pays when selling a mutual fund within a certain number of years called the holding period – usually seven. The fee is a shown as a percentage and usually decreases yearly until the seventh year when it drops to zero. Different funds will usually have different options available to investors pertaining to how they want the back-end load to be applied. Back-End Load mutual funds are okay if you plan on investing for the long-term; otherwise, you’ll pay high commission to withdraw early. Remember that almost all mutual funds charge an annual administration fee that is automatically withdrawn from your account, so back-end funds aren’t completely free of charges. What is A Contingent Deferred Sales Charge (“CDSC”)? A Contingent Deferred Sales Charge (“CDSC”) is a charge incurred if you sell your shares within a certain number of years. A CDSC is a Back-End Load charged only when a special circumstance occurs. A good example of a CDSC is a charge
A back end load is a expense charge when you sell your mutual fund – most companies charge this to prevent you from selling during short term periods under 2 years and let it slide if your in the fund for many years (Over 5 years) It’s better to go with No-load funds with no back end loads since your giving away your money if you sell.
