The sales charge is a fee paid to purchase or sell a specific investment.
It is expressed as a percentage of the amount invested.
The term is most often used when discussing mutual funds.
A sales charge, also known as a "Back-end Load," investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers.
In mutual funds, the sales charge is typically called a 'load', which may be charged up-front, at the time of sale, or some other arrangement.
Suppose that an investor puts $10,000 in the XYZ mutual fund with a front-end load of 5.75% for small investors.
The investor’s actual investment in the fund after the sales charge would be $9,425.
However, sales charges are only one of several types of fund fees that investors can reduce or eliminate.