These days, many mutual funds from large asset managers such as etrade, Schwab or Vanguard offer no fee for mutual fund buy/sell.

So why would I pay for front-end or back-end fees to purchase/sell a mutual fund?

Yes, there are limited options on the available mutual funds to choose for the zero-transaction-fee mutual funds in those asset managing houses. But I wonder if there are funds that are really worth the 1-5% front-end or back-end fees ?? Or are the front-end/back-end fees a "bad legacy" of mutual fund transaction ?

  • 3
    Because a financial advisor (who probably gets a commission) has convinced you that those funds are somehow better than the no-load ones?
    – jamesqf
    Nov 29, 2018 at 4:02
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    With all of the ETFs and no commission mutual funds available today, it's makes little sense to pay front or back end fees. The exception to this would be a fund that consistently outperforms despite the fee. Since I'm not a fund kinda guy, I have no clue if that exists. Nov 29, 2018 at 5:14
  • 1
    "but where they are paid, they are normally paid by the fund itself," which makes up the money out of thin air? No, they are ALWAYS paid by the investor - either exposed or through hidden fees and larger margins. Fund companies are not in the business of paying out commission without a way to make the money back.
    – TomTom
    Nov 29, 2018 at 7:04
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    @Mike Scott - If a fund outperformed the market every year for the past decade, I wouldn't attribute that to random chance. Nov 29, 2018 at 13:36
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    @BobBaerker Half of all funds out-perform in year 1. Half of those out-perform in year 2, so you’re down to one in four. After ten years you’re left with one in 1024, entirely at random.
    – Mike Scott
    Nov 29, 2018 at 16:06

2 Answers 2


In general you should not. Some people may believe there is some advantage to be gained by paying these high fees because those funds are somehow better. But for the typical retail investor, the odds that you will pick a fund that is really worth its high fees are tiny. In most cases the fees will just be money down the drain.


There are two questions here. One is managed fund with high expenses vs passive fund with low expenses, and is adequately covered by a number of resources.

Funds with (relatively) high expenses generally come in multiple share classes. That's where front-end and back-end load come in. They are an alternate to no-load share classes with a higher ongoing expense ratio, where the fee accumulates slowly.

If you intend to hold the shares for a long time, you would prefer the flat fee (load) share class. If you might trade frequently, you'd want to pay only on the time you hold the fund, and choose the higher ER no-load class.

Also note that many shares with a back-end load also have a waiver -- the load only applies if the shares are sold in the short term.

  • is it correct to assume, based on what you provided, that flat fee/load share class (which include front-end and/or back-end load) charge no ER ???
    – B Chen
    Nov 30, 2018 at 0:39
  • @BChen: The ER will not be zero, but it will be substantially lower than the no-load share classes.
    – Ben Voigt
    Nov 30, 2018 at 13:36
  • For example, see RAITX (no load, 1.54% ER) and TDFYX (same fund, 2.5% load, 0.79% ER). The same fund also has REITX (no load, 0.46% ER) which is obviously better in terms of fees, but can only be purchased by mega-sized retirement plans worth billions of dollars.
    – Ben Voigt
    Nov 30, 2018 at 13:53

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