- Front-load funds charge the load fee when you open the fund. It takes part of your investment and uses that as a commission.
- Back-load funds charge the load fee when you exit the investment based on your initial investment. Sometimes, back-loaded funds will waive the load fee if you hold the investment for long enough.
- Level-load funds charge an annual load fee for as long as you hold the fund.
Load fund share classes
Like stocks, mutual funds also have different types of share classes. These generally correspond to the type of load fund. In general, there are three types of load fund share classes.
Class A shares are front-end load funds, which require the load fees to be paid from the initial capital. This means that if you invest $10,000 in a class A load fund with a 5% load fee, you're actually investing $9,500.
Class B shares are typically back-end load funds but often offer a decreasing load fee the longer you hold the investment. Class B shares can also have level load fees along with back-end load fees. If you reach the zero point, they will typically be converted to class A shares to eliminate all types of load fees.
Class C shares are typically level-load funds that have indefinite level loads. They can also have back-end load fees, but their main source of payment to the person who sold them is the level load fee. You'll never escape these fees, no matter how long you hold a class C share.