Best No Load Mutual Funds Are More Consistent Performers

2007-03-08 10:33:40

( Financial )



You now probably realize that mutual funds are excellent investments. You will find it easy to invest in mutual funds because you don’t have to research anymore which stocks or bonds to buy. The mutual fund manager handles the selection for you.

You have to select between load and no load funds. There are three kinds of loads in mutual funds: front-end (you pay sales fees when investing), back-end load (you pay fees when divesting), and level load (you pay flat annual fees).

Since loads are expensive, many investment gurus advise that you are better off being a no load fund investor putting your money in no load mutual funds.

Not all no load funds are alike. When you are searching for the best no load mutual funds try to monitor the performance of the no load funds you’re thinking of buying. You can check how the no load funds react to stock market movements and compare the reaction with similar no load mutual funds.

This way, you’ll get a feel of how the funds perform over the investment cycle. The best no load mutual funds should be less volatile, losing less in down markets and doing great in up markets.

The best no load mutual funds are 100 percent pure no loads. Be careful about this, because salespersons may incorrectly call a fund a no load mutual fund but there may actually be a back-end load.

There are also so-called no load mutual funds that actually charge you a 12b-1 fee. The best no load mutual funds are very forthright about this: they charge absolutely no fees, not even the 12b-1.

This fee corresponds to marketing and distribution expenses which the fund managers charge against the fund’s assets. A true no load mutual or 100 percent no load mutual does not charge you for 12b-1 fees.


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