when mutual fund investments and annuities were first introduced to the market investors were only able to access them through licensed brokers investment advisors or financial planners the front end load concept arose out of an effort to provide compensation for these go betweens and of course to encourage them to put clients into a particular product 
nowadays individuals can often purchase products directly from the mutual fund company or insurance company the lion s share of the contemporary front end load goes to the investment company or insurance carrier that sponsors the product the remaining portion is paid to the investment advisor or broker who facilitates the trade some financial professionals argue that a front end load is the cost investors incur for obtaining an investment intermediary s expertise in selecting appropriate funds it could also be considered payment in advance for the expertise of a professional financial manager to oversee the client s money investments that assess a front end load do not charge an additional fee for redemption of shares previously purchased although trading fees may apply similarly the majority of front end load investments do not charge investors an additional sales charge when shares are exchanged for a different investment as long as the same fund family offers the new investment advantages of front end load fundsinvestors may opt to pay upfront fees for several reasons for instance front end loads eliminate the need to continually pay additional fees and commissions as time progresses allowing the capital to grow unimpeded over the long term mutual fund a shares the class that carries front end loads pay lower expense ratios than other shares pay 2 expense ratios are the annual management and marketing fees further funds that don t carry up front fees often charge an annual maintenance fee that increases along with the value of the client s money meaning the investor may wind up paying more in contrast front end loads are often discounted as the size of the investment grows lower fund expense ratiounimpeded principal growthdiscounted fees for larger investmentsless capital investedrequired longterm investment horizonnot optimal for short investment horizonsdisadvantages of front end load fundson the downside since front end loads are taken out of your original investment less of your money is going to work for you given the benefits of compounding less money at the outset has an impact on the way your money grows over the long term it may not matter but front end loaded funds are not optimal if you have a short investment horizon you won t have a chance to recoup the sales charge through realizing earnings over time also given the plethora of no load mutual funds available currently some financial advisors argue that no one should be paying any sales charges front back or ongoing real world examplemany companies offer mutual funds with varying loads to meet the investing style of any investor american funds growth fund of america agthx is an example of a mutual fund that carries a front end load to illustrate how the load works let s say an investor invests 10 000 in the agthx fund they will pay a front end load of 5 75 or 575 the remaining 9 425 is used to purchase shares of the mutual fund at the current share net asset value nav price 3