Economics Mutual Funds Questions
A front-end load is a fee charged to investors when they initially purchase mutual fund shares. This fee is deducted from the investment amount and reduces the total amount of money invested in the fund. On the other hand, a back-end load, also known as a redemption fee or deferred sales charge, is a fee charged to investors when they sell or redeem their mutual fund shares. This fee is typically a percentage of the value of the shares being redeemed and is deducted from the proceeds of the sale. The main difference between the two is the timing of when the fee is charged - front-end load is charged at the time of purchase, while back-end load is charged at the time of sale.