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Load Fund

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A load fund is a mutual fund that charges a sales commission in addition to its net asset value (NAV). This sales charge is the "load" part of a load fund. The sales charge of a load fund is a percentage of the net amount invested, typically somewhere between 4 and 8 percent, but may even be as low as 0.5 percent or as high as 8.5 percent in some cases. A load fund may either require the fee be paid when the fund is bought (a front-end load), or the load fund may collect the fee when the fund is sold (a back-end or redemption load). These sales commissions for a load fund are paid to a broker or representative. In exchange for paying the sales charge on a load fund, a mutual fund company usually may choose to charge lower administration fees. The opposite of a load fund is a no-load fund, which doesn't impose a sales charge.



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