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Issue Surcharge For Funds

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Anyone who wants to invest money and is interested in investing in funds will come across the term issue surcharge relatively quickly. But what is behind these additional costs for funds? What exactly is an initial charge? How, for what and when is it calculated for investments? Here you will find information on the subject of front-end loads and fund fees as well as tips on funds without front-end loads.

What is an initial charge?

Taken literally, the issue surcharge means: A surcharge is levied for the issue of funds by financial service providers. These costs are added once to the investment amount and must be paid directly by the buyer. An issue surcharge is generally levied by the provider to cover fees for consulting and sales services. It is the difference between the issue and redemption price of funds.

GOOD TO KNOW

Issue price = share price or total value of the acquired investment + issue surcharge,

Redemption price = share price or total value of the acquired investment

What is the average front-end load for investment funds?

The amount of the front-end load varies between 0 and 7% of the investment amount and is determined by the respective investment company. The front-end load is always given as a percentage, as the value of funds varies and so do the costs for the units. Since the issue surcharge is calculated as a percentage based on the amount invested, no fixed sums can be given in euros due to the fluctuations.

Why are the subscription fees different?

The amount of the front-end load depends on the investment objective or the focus of the fund. As a rule, bond funds that invest in fixed-income paper have a regular sales charge of 3–3.75%. In the case of equity funds or funds of funds, the issue surcharge is usually 5% and in some cases it can be higher.

Are discounts available on sales charges?

The investment company that launched the fund also determines the amount of additional costs for an investment in funds. The respective sales partners conclude sales agreements with the investment companies and can thus co-decide on discounts. In some cases, discounts of up to 100% on the regular issue surcharge are granted.

What other costs besides a front-end load can be incurred when investing in funds?

There are some costs to consider when considering investing in funds. In addition to the issue surcharge, these are above all: Fees for the administration and management of funds: These are often calculated annually on a pro rata basis from the investment amount. In the case of traditional funds, such fees are on average 0.8 to 2%. Fees for custody account management: These vary greatly from provider to provider. The depot is often run free of charge.

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