Listen to a Business English Dialogue About Back end load
Lydia: Hi Christopher, do you know what a “back-end load” is in finance?
Christopher: No, I don’t. What does it mean?
Lydia: A back-end load is a fee that investors may pay when they sell certain types of mutual funds, usually charged as a percentage of the total value of the shares being sold.
Christopher: Oh, I see. How does a back-end load differ from other types of fees?
Lydia: Unlike front-end loads, which are charged when investors purchase mutual fund shares, back-end loads are charged when investors sell their shares, typically as a way for fund companies to recoup sales charges over time.
Christopher: That’s interesting. Are there any drawbacks to back-end loads?
Lydia: One drawback is that back-end loads can reduce the amount of money investors receive when they sell their mutual fund shares, potentially impacting their overall investment returns.
Christopher: I understand. How do investors determine if a mutual fund has a back-end load?
Lydia: Investors can typically find information about a mutual fund’s fees, including any back-end loads, in the fund’s prospectus or disclosure documents.
Christopher: Thanks for explaining, Lydia. Back-end loads seem like an important factor for investors to consider when choosing mutual funds.
Lydia: Absolutely, Christopher. It’s essential for investors to understand all the fees associated with a mutual fund before making investment decisions to ensure they align with their financial goals.