Do not get confused with terms such as load when dealing with mutual funds. A load is the commission paid to sales person when you buy or sell shares of a mutual fund. It does not form part of the fees to the investment advisor. The performance of a mutual fund is not based on the load. Read up the whys and how’s of no load mutual funds and their features. It is finally the quality of the mutual funds that should affect your decision to keep or sell a fund.
Load Vs No load mutual fund
Some financial analysts are of the opinion that in the long run, there is not much difference between load and no load mutual funds. In the short time frame, the load or sales commission affects the price of the mutual funds units. The more popular opinion is that by going in for a load fund, you are paying a commission and that amount does not get invested. If you were to calculate the probable earnings by having invested that commission too, you would notice that it adds to a considerable amount.
Front end load on mutual funds refers to the fees paid when you buy the shares of the fund. The back end load is when you are charged while selling shares of a mutual fund. Constant load mutual fund is one where you pay sales fee each year you keep the shares. But what is essential is to check the mutual fund and its performance and not merely the load factor.
Choosing no load mutual fund
Shares of no load mutual funds are sold directly by the investment company without commissions. So all the money that is invested is working for you. Fees for the investment advisor and funds manager are paid out of the profitability of the mutual fund.
Look up various no load mutual funds and check their performance over a period of time. Match your investment goals with a suitable mutual fund, be it in terms of risk tolerance or diversity. Look for any hidden fees.