Load/No-Load Funds

Load funds require that you pay an up-front commission to a broker while no-load funds do not require a commission. One question remains, how do you decide between the two? Although the answer seems obvious, you should continue to read onward to determine what both options offer.

Load Funds
Load funds are tailored to suit a person who does not have enough time to carry out the necessary fund-maintenance responsibilities. A broker is available and is working on your behalf from the beginning of the process. This professional can help you choose the correct investment strategy and program that accommodates your specific needs. In addition, the broker assists you with any inquiries regarding your choices and after they are implemented. Finally, the efficiency and method of reimbursement are flexible. These mutual funds usually require a 1% to 8 1/2% up-front commission.

No-Load Funds
No-load funds are ideal for a person who wants to control the decisions, investment choices, and fund-maintenance responsibilities otherwise supervised by a broker. These types of mutual funds provide a sense of autonomy to the investor.

Although you would immediately think that no-load funds result in absolutely no fees, think again. Potentially, you will be subject to a 12b-1 fee that means you will pay up to 1/2% of 1% of total fund assets. This fee is applied to any initial advertising and marketing expenses. If you want to find out if the 12b-1 fee applies to your mutual fund, just consult the expense-to-net-assets ratio that accompanies your no-load fund.

Please ensure that you diligently read the prospectus, which accompanies mutual funds. This gives you a clear idea of the factors (objectives, expenses, and risks) involved with the funds themselves. A financial professional can better explain the details.

This information is presented to educate the reader and does not constitute professional tax and legal advice.