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No-Load vs Load... Page 2
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No-Load vs Load?
Choosing between no-load and load funds is only one part of the mutual fund equation. You
should consider all expenses that might affect your fund's total return. Even then, it
might be difficult to pick the right choice. And don't forget your main objective when
selecting a mutual fund -- a fund that performs.
Some ideas to consider:
- There is no correlation between paying a load and getting a great fund manager.
Remember, the sales charge goes to the person who sold you the fund -- not the fund
management.
- There are many studies that have found no-loads outperform load funds by a large margin
-- you'll find brokers or other investment professionals who'll contradict these findings.
The bottom line: Good judgement and extensive research should be part of your decision to
invest in any mutual fund.
- When a comparable no-load fund has a high expense ratio and low rate of return, a load
fund might be the best alternative.
- Questions to ask:
- Will a sales charge on a load fund be offset over time if the fund outperforms many of
its no-load peers?
How long am I planning to stay with the fund?
How large will my contributions be and how frequent will I make them?
How do expense ratios compare among funds?
Generally, the longer you stay with a load fund, the less important the sales charge
will be.
You are capable of picking a no-load mutual fund despite what brokers tell you.
Brokers who work for commission are prone to recommend investment products that
put food on their tables -- not yours. Their advice will likely include load funds.
The best fund? No-load, low annual fees, and high total return.
Next:
Open
vs Closed
Mutual Fund Calculators:
--------------------------
• How do growth and income
funds compare?
• Which is better: a front
or back load?
• Which is better: load or
no load?
• How much do fees affect my
return? |
