No Load Fund Investor Needs To Make Own Research

2007-11-09 05:11:17

( Financial )



There are two basic classifications of mutual funds: load funds, and no load funds. Load is a term which refers to a sales charge, that is, it is the cost of being able to buy into the mutual fund. The load is effectively a reduction on the amount of investment that actually goes into the fund.

When you buy load mutual funds, you will have to pay a commission to a broker, financial planner or a salesperson. In no load mutual funds, you purchase directly from the mutual fund company. Thus, no commission is taken from your investment money. Purchasing no load funds may be interesting, but a no load fund investor has a number of things to consider.

A no load fund investor usually calls the mutual fund company using a toll-free number to purchase a fund. The company will send you the necessary prospectus and application forms to fill out so you can send them back for opening a no load account.

Although you get an advantage of having all of your money invested in a no load fund from the time you open your account, you will not receive much professional advice on which fund to choose. You may be able to ask a representative from a no load mutual company through the toll-free number to explain to you the different products of the firm.

You will probably obtain information about the investment objective of the fund plus other particulars like dividend yield, management fees, style of management, and the portfolio of stocks currently held. However, the representative cannot give advice as to what fund is appropriate for you due to lack of information or incomplete idea of your particular financial situation. For this reason, you will have to dig and research more information if you really intend to become a no load fund investor.


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