Back-End Load

A fee that an investor pays when selling a mutual fund within a certain number of years - usually seven. The fee is a shown as a percentage and usually decreases yearly until the seventh year when it drops to zero. Different funds will usually have different options available to investors pertaining to how they want the back-end load to be applied.

Sometimes in exchange for paying no fees up front, the investor pays an annual fee for marketing and managing that is higher than the fees charged for a front-load fund.

Back-end mutual funds are okay if you plan on investing for the long-term; otherwise, you'll pay high commission to withdraw early. Remember that almost all mutual funds charge an annual administration fee that is automatically withdrawn from your account, so back-end funds aren't completely free.

In the U.K., a Back-End Load is called an "Exit Charge." While in Canada, a Back-End Load is sometimes called a "Deferred Sales Charge".