Definition
A mutual fund that charges a sales commission, called a load, paid to the broker or advisor who sells it. A front-end load is taken out of your purchase, a back-end or deferred load is charged when you sell within a set number of years, and level-load share classes charge an ongoing fee instead. No-load funds charge none of these, and every load is on top of the fund's expense ratio.
Why it matters
A load is a haircut on your money before it earns anything, and it exists to pay for the sale rather than to run the fund. Share classes of the same fund can differ only in how the load is charged, so the class you are sold matters as much as the fund.
Example
An investor puts $10,000 into a fund with a 5% front-end load: $500 goes to commission and $9,500 is invested. In a no-load fund the full $10,000 goes to work. Growing at 7% for 20 years, the $500 head start becomes roughly $1,900 of extra value, before counting the higher expense ratio load funds often carry.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.