No Load Funds Should Truly Have No Load

2007-03-08 10:33:40

( Financial )



There is a big difference between load and no load mutual funds. You should be an informed no load fund investor, fully capable of identifying and finding mutual funds. You do not have to pay a broker to find good mutual funds for you. The broker’s interests are likely to conflict with yours.

No load funds are mutual funds without sales loads (which are commissions paid to the broker). Sales loads average around 5 percent of the amount you invest. You, therefore, save money by investing in no load funds.

When you are looking for the best no load mutual funds, make sure first of all that they are indeed no load funds. You should do some research on the no load mutual funds that you are considering. You can look for a good no load mutual quoting service on the Internet.

In the quoting service’s website, type the fund’s ticker symbol and read carefully the sections on the fund’s expenses. Ignore the management fees and administrative operational expenses: these are fees that you have to pay, whether you buy into load or no load funds.

Check if there is anything that mentions load items like actual fees, front-end (or deferred) load, 12b-1 fees, and sales charge (front-end or deferred). If any of these are present, that fund is not a no load fund.

Some mutual funds may legally claim that they are no load funds if their 12b-1 fees do not exceed one-quarter of one percent of the fund’s total assets. So you must be alert for this when you search for the no load mutual funds that you will buy.

The true no load funds have absolutely no charges levied on you, not even the 12b-1 fees (which are marketing and distribution expenses usually spent when the fund is new in the market).


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