Load Fund

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Definition of 'Load Fund'

A load fund is a mutual fund that charges a sales commission when you buy it. The commission is typically a percentage of the amount you invest, and it can range from 1% to 5%. Load funds are often sold by financial advisors, who earn a commission on the sale.

There are two main types of load funds: front-end load funds and back-end load funds. Front-end load funds charge the commission when you buy the fund. Back-end load funds charge the commission when you sell the fund.

Load funds can be a good investment for investors who are looking for professional advice and guidance. However, it's important to be aware of the fees involved before you invest in a load fund.

Here are some of the pros and cons of load funds:


* Load funds typically have higher returns than no-load funds. This is because the sales commission is used to pay for the research and management of the fund.
* Load funds offer professional advice and guidance. Financial advisors can help you choose the right fund for your needs and make sure that you're invested in a fund that's appropriate for your risk tolerance.


* Load funds charge high fees. The sales commission can eat into your returns, especially if you're only investing a small amount of money.
* Load funds can be difficult to sell. If you need to sell your shares of a load fund, you may have to pay a redemption fee.

Before you invest in a load fund, it's important to weigh the pros and cons carefully. If you're not sure whether a load fund is right for you, talk to a financial advisor.

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