A front-end load is a fee paid to purchase an investment. It is expressed as a percentage of the amount invested. 




HOW IT WORKS (EXAMPLE):




Let's assume you are interested in making a $100,000 investment in Private Lending Fund, which has a 2% front-end load. Of the $100,000 investment, $2.000 ($100,000 x .02) is paid to the Private Lending Fund and $98,000 is actually invested in the fund.




WHY IT MATTERS:




Front-end loads are most often associated with mutual funds, but annuities, life insurance policies, private funds and limited partnerships may have front-end loads. When funds first became popular, most could be purchased only through brokers dealers or financial advisors. As the number and popularity of priavte funds increased, "no-load", “back-end-load", and “performance fees” soon became the norm.




Additionally, the nature of the investment, the investor's risk tolerance, and the investor's time horizon should always be considered when evaluating any fund investment.




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