UK Accounting Glossary
A charge imposed when investors redeem (sell) shares in mutual funds, which has the effect of discouraging withdrawals. Traditionally, the earlier you redeem, the higher the back-end load. After holding for five years or so, there will usually not be a back-end load. In the UK these charges are known as an exit charge.
A back-end load is a sales charge or a commission paid when an investor sells an investment. A back-end load may also be known as a redemption fee or a deferred sales charge. In England, a back-end load fee is sometimes called an exit charge. A back-end load is often added to a mutual fund or to some annuities. A back-end load is designed to discourage investors from making withdrawals from a fund or annuity, although oftentimes back-end load fees will be waived if an investor holds an investment for a certain number of years. A back-end load can be a sales incentive for an investment, as many investors baulk at paying fees up-front but aren’t as concerned about fees paid down the road.
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This glossary post was last updated: 4th February 2020.