In Chapter 3, we describe in detail all of the fees pertaining to mutual funds. A fee that comes in to play when purchasing a fund is the Sales Charge, or Load. The sales fee is applied to an investment at the time of initial purchase. But be careful, some funds have back-end sales fees, fees that are applied when selling the fund.
Sales loads range from three percent and eight-and-a-half percent. Sales loads are usually only present when purchasing funds from stockbrokers, financial planners, investment advisors, and mutual fund companies. The reasoning behind sales loads is that the sales loads cover the level of effort of the sales person who sold you the fund and helped you select the fund for your portfolio. Unfortunately, sales loads are sometimes present on funds purchased directly from fund companies even when no one helped you with the selection. All other things being equal, one would prefer “no-load” funds.
Check in the mutual fund’s prospectus to see of the fund has a sales charge.