Glossary: Allocation rate

This is the percentage of an investor’s initial cash or capital outlay that actually goes towards the final investment after any initial fees and charges have been deducted. For example, if an investment or pension fund carries a 5% front-end fee, only 95% of an investor’s initial investment will actually be placed into the fund itself, with the rest going to the investment company. The higher the fees, the lower the overall allocation rate will be for the investor.

Relevant to: First-time investor

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