BROWSE

Sales Charge

What is a 'Sales Charge'

A sales charge is a commission paid by an investor on his or her investment in a mutual fund. The sales charge is paid to a financial intermediary (broker, financial planner, investment adviser, etc.) for selling the fund and is intended to provide compensation for the financial salesperson's efforts in assisting clients in selecting the mutual funds best suited to their needs.

Explaining 'Sales Charge'

A large number of mutual funds carry sales charges. The amount of a sales charge represents the difference between the purchase price per share paid by the investor and the net asset value per share of the mutual fund. By regulation, the maximum permitted sales charge is 8%, but most loads fall within a 3-6% range.

With funds that carry a sales charge, there are three classes of shares: A, B, and C. The letter designations indicate the timing of when the charge is paid. For Class A shares, the sales charge is paid at the time of purchase (front-end load). For Class B shares, it is due when the shares are sold (back-end load). Class C shareholders incur a sales charge on a regular basis for as long as they hold the fund.


Further Reading


Trends in park tourism: Economics, finance and management
www.tandfonline.com [PDF]
… Most of the world's protected areas charge low entry and use fees that cover … agency for specialised recreation services, equipment rental, accommodation, food services and souvenir sales … 1990s (Figure 3). The recovery of management costs from tourist charges varied from …

Regulation of Finance Charges on Consumer Instalment CreditRegulation of Finance Charges on Consumer Instalment Credit
www.jstor.org [PDF]
… Most of the world's protected areas charge low entry and use fees that cover … agency for specialised recreation services, equipment rental, accommodation, food services and souvenir sales … 1990s (Figure 3). The recovery of management costs from tourist charges varied from …

Retail sales and use taxationRetail sales and use taxation
www.oxfordhandbooks.com [PDF]
… Most of the world's protected areas charge low entry and use fees that cover … agency for specialised recreation services, equipment rental, accommodation, food services and souvenir sales … 1990s (Figure 3). The recovery of management costs from tourist charges varied from …

Asset management fees and the growth of financeAsset management fees and the growth of finance
www.aeaweb.org [PDF]
… Most of the world's protected areas charge low entry and use fees that cover … agency for specialised recreation services, equipment rental, accommodation, food services and souvenir sales … 1990s (Figure 3). The recovery of management costs from tourist charges varied from …

Crises, liquidity shocks, and fire sales at financial institutionsCrises, liquidity shocks, and fire sales at financial institutions
papers.ssrn.com [PDF]
… Most of the world's protected areas charge low entry and use fees that cover … agency for specialised recreation services, equipment rental, accommodation, food services and souvenir sales … 1990s (Figure 3). The recovery of management costs from tourist charges varied from …

Turgut Özal and his economic legacy: Turkish neo-liberalism in critical perspectiveTurgut Özal and his economic legacy: Turkish neo-liberalism in critical perspective
www.tandfonline.com [PDF]
… Most of the world's protected areas charge low entry and use fees that cover … agency for specialised recreation services, equipment rental, accommodation, food services and souvenir sales … 1990s (Figure 3). The recovery of management costs from tourist charges varied from …



Q&A About Sales Charge


How much of a difference does the sales charge represent between purchase price and net asset value per share?

It represents the difference between purchase price per share paid by the investor and net asset value per share of the mutual fund.

Why do funds have different classes of shares with varying amounts charged to investors?

To compensate those who sell them for their efforts in assisting clients in selecting funds best suited to their needs.

What is a sales charge?

A sales charge is a commission paid by an investor on his or her investment in a mutual fund.

Who pays the sales charge?

The investor pays the sales charge.

What are three classes of shares that carry different types of charges?

Class A, B, and C shares carry different types of charges. Class A shareholders pay at time of purchase (front-end load), class B shareholders pay when they sell (back-end load), and class C shareholders incur regular charges for as long as they hold their funds.

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