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Do ETFs charge front-end or back-end loads like mutual funds?

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ETFs do not charge front-end or back-end loads like some mutual funds. Instead, ETFs have a different cost structure that is generally more transparent and often lower than mutual funds. Here's a breakdown:

Mutual Fund Loads
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• Front-End Load: A sales charge or commission you pay upfront when you buy shares of a mutual fund.
• Back-End Load: A sales charge or commission you pay when you sell your shares, often referred to as a contingent deferred sales charge (CDSC).

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These loads are primarily associated with actively managed mutual funds sold by brokers or financial advisors.

ETFs and Load Fees

​ETFs are traded on exchanges like stocks, so they do not charge sales loads. However, they have other costs to consider:
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1. Trading Costs:
   • While ETFs don’t have load fees, you may incur brokerage commissions when buying or selling ETFs, depending on your broker. (Many brokers now offer commission-free trading for ETFs.)
   • You’ll also encounter the bid-ask spread, which can slightly increase the cost of trading.
2. Expense Ratio:
   • ETFs charge an annual expense ratio to cover management and operational costs, but this fee is automatically deducted from the fund’s NAV and does not involve a separate payment from you.
3. Premiums/Discounts to NAV:
   • ETFs trade at market prices that can differ slightly from their NAV. Buying at a premium or selling at a discount can be an indirect cost.

Why ETFs Don’t Have Load Fees

​ETFs are designed to be self-directed, meaning you typically buy and sell them directly through a brokerage account rather than through a financial advisor or broker who charges sales commissions. This structure eliminates the need for load fees.

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