In finance, the term front-end load refers to one-time fees charged to an investor when they buy shares in an investment fund.
Front-end loads are not accounted for in the total expense ratios (TERs) published by investment funds. The TER accounts for recurring costs. Front-end loads are made up of one-off fees charged when you buy shares.
Not all investment funds charge front-end loads. When investing in funds, it is important to understand whether or not a front-end load is charged and how high the front-end load is. Typically, front-end loads are charged as a percentage of the invested amount.
Example of a front-end load:
An investor wants to buy shares in an investment fund. The fund’s going rate is 40 Swiss francs per share, and it charges a front-end load equal to 1% of the share price. If the investor bought 1000 shares worth a total of 40,000 francs, they would pay a front-end load of 400 francs (1% of CHF 40,000) in addition to the 40,000 francs for the shares.
See also: Back end load
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