No-Load Mutual Fund Guide

No-load mutual funds reduce the expenses associated with investing.

Many investments contain loads, which are added expenses that an investor must pay when they purchase or sell mutual fund shares. Some investors prefer funds that do not have added fees or loads while others calculate the load into their overall investment portfolio's rate of return.

Purpose

No-load mutual funds are funds that do not charge investors additional fees to buy into or to sell the fund. According to the Financial Industry Regulatory Authority (FINRA), investors "typically buy shares directly from the investment company that offers these funds." These funds are usually offered as a lower-cost investment product to potential investors.

Function

Loads are added sales charges to mutual funds that compensate investment brokers for performing a transaction for an investor. "Front-end" loads charge the fee when the initial shares of the fund are purchased. "Back-end" loads are charged when shares are sold during a specific load period.

Considerations

Many mutual funds are available through a variety of investment companies. Some companies charge loads on these funds while others do not. Savvy investors research the funds they are interested in and shop different investment companies to purchase their funds at the lowest possible cost.

References

• Financial Industry Regulatory Authority: Mutual Funds