A sales load is a fee you pay when you buy mutual fund shares (a front-end load) or sell them (a back-end load), and it works like a commission to the broker who sold the fund.
A front-end load comes off the top of what you invest. At a 5.75% load, $575 of a $10,000 purchase goes to the sales charge and $9,425 is invested. A back-end load, usually a contingent deferred sales charge (CDSC), is taken when you sell, and typically shrinks the longer you hold the shares until it reaches zero.
FINRA limits the combined front-end and deferred sales charges on a fund without an ongoing asset-based sales charge to 8.5% of the offering price. Many funds lower the load for larger purchases at set breakpoints.
Loads pay for the sale, not for ongoing advice. Fee-only advisors don't receive them, and many funds also offer share classes with no load. The SEC describes "clean shares" as a class with no front-end load, deferred sales charge or asset-based distribution fee.
How to check
Look for "Maximum sales charge (load)" under shareholder fees in the fund prospectus's fee table, and check your trade confirmation for the share class you actually bought.
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