A level load is a fixed charge for membership in a mutual fund which is usually assessed annually. If someone holds shares in a mutual fund, the level load must be paid in order to retain ownership. This fee is designed to compensate the operators of the fund for the expenses of operating the fund, including the costs of making investments on behalf of members, paying staffers to manage day to day paperwork, and so forth.
The level load is assessed as a fixed percentage of the total value of the fund. The percentage does not vary, but the amount paid may, depending on whether the fund is doing well or poorly. This is in contrast with other types of sales charges which are assessed when transactions occur. Over time, people can actually end up paying more in the form of a level load than they might with front end loads and back end loads, which are transaction based.
Operators of the mutual fund deduct the level load directly from someone's earnings. This will be shown on earnings statements, which will also disclose the percentage upon which the level load is based. If there appears to be an error, it should be addressed as quickly as possible so that it can be corrected in a timely fashion. People who are not sure about whether or not something is an error can bring it up as it is better to be safe than sorry.
Some mutual funds offer people options when they sign up, allowing them to decide which types of fees they would prefer. Financial regulators may cap the fees which funds can charge, and it is important to make sure that a fund is complying with these caps. People may want to consider how long they want to hold the investment and how they will use it when deciding which sales charge structure they would prefer, and a representative of the fund can offer additional advice and assistance.
It can also be advisable to compare the level load charges of multiple mutual funds to get an idea of what the going rate is. If a fund charges an unusually high or low rate, investors may want to explore the reasons behind the unusual rate. Hand in hand with investigations of rates should go an investigation of a fund's performance history. Mutual funds provide public disclosures which people can use when researching their investment decisions, and it is also possible to find reviews of mutual funds and other investment options in financial publications.
