Deferred Load is also known as back – end sales charge and is levied at the time of redemption or sale transaction of shares or more particularly on Mutual Funds. The percentage or quantum of Deferred Load charged generally declines with time or the longer the investment is held. In most cases, it becomes zero after a reasonable time period. A fund charges a certain fee for managing the mutual fund investment and understanding the fee structure is essential for investors in determining whether it is appropriate for their portfolio.
A deferred load is beneficial from the investor’s perspective as it is not charged from the initial investment amount, which keeps on earning. The charge comes into play only at the time of redemption, if applicable. Still, since it would add to the overall cost of investment, investors should check the amount of deferred load chargeable from the Prospectus, before investing.
