When buying fund shares, a fee is due, this is called a front-end load (agio, load). This fee only has to be paid once. The front-end load is used to cover the fees for marketing and administration of the fund and therefore does not flow into the fund company. Therefore, front-end loads have a negative impact on returns. For this reason, it makes sense to keep these fees as low as possible. The front-end load is calculated as a percentage of the redemption price of the fund units. This means that the actual amount of the front-end load to be paid (in euros, not in percent!) Depends on the current redemption price. The amount of the front-end load is determined by the respective corporation and can differ from provider to provider. It varies between 0 percent and 7 percent, and for more than half of the retail funds approved in Germany, the issue surcharge is at least 5 percent. There are two ways to calculate the front-end load, the net formula and the gross formula.

Calculate the issue surcharge using the net method

In Germany, the net method is the most common way of calculating the front-end load. In this calculation, the front-end load is added to the amount actually invested. That means: "Actual amount + sales charge = total amount."

Example: If a private investor wants to invest € 100 in a mutual fund with a 4% sales charge, the net method is as follows:

€ 96 + 4% = € 100

Here, the € 96 corresponds to 100% that is invested in a fund with a 4% issue surcharge. So € 100 is equal to 104%. So the formula could also be expressed as follows:

100% + 4% = 104%

Calculate the issue surcharge using the gross method

The gross method is very rarely used in Germany to calculate the front-end load. With this method, the issue surcharge is calculated from the issue price. That means: "Order amount - issue surcharge = total amount."

Example: We take the same investment of € 100 that is put into a fund with a 4% sales charge. So the calculation could look like this:

€ 100 - 4% = € 96

Here the € 96 also corresponds to 96%. The remaining € 4 corresponds to 4%. With the gross method, € 100 is exactly 100%. Thus, the gross formula can also be expressed as follows:

100% - 4% = 96%

Fund brokers often offer discounts of up to 100% on the front-end load, so these costs can be avoidable under certain circumstances.

​