What is the difference between a no load and load fund?

Asked By: Faina Requerey | Last Updated: 18th March, 2020
Category: personal finance mutual funds
4.7/5 (115 Views . 17 Votes)
Load funds are mutual funds that charge a sales fee or commission. No-load funds usually do not charge any sales fee or commission, as long as you keep your money invested for a specified period, often five years.

Click to see full answer

Moreover, what is the difference between a load and no load mutual fund?

A mutual fund load is a fee charged for the purchase or sale of a mutual fund. Funds that charge loads are generally referred to as "load funds" and funds that do not charge loads are called "no-load funds."

Secondly, what is a load fund? A load fund is a mutual fund that comes with a sales charge or commission. The fund investor pays the load, which goes to compensate a sales intermediary, such as a broker, financial planner or investment advisor, for his time and expertise in selecting an appropriate fund for the investor.

Furthermore, what is a no load fund?

A no-load fund is a mutual fund in which shares are sold without a commission or sales charge. This absence of fees occurs because the shares are distributed directly by the investment company, instead of going through a secondary party.

How do you tell if a mutual fund is no load?

Every mutual fund has its own set of webpages that cover information about the fund including investment objectives, performance history and the fund's fee structure. If no sales charge is listed -- front-end or deferred -- a fund is no-load.

39 Related Question Answers Found

Are Load Funds Worth It?

The load itself really isn't bad, but paying the load is bad. Mutual fund companies make money from ongoing management expenses, whether it's a no-load or load fund. While some things are worth paying more for, loads are completely unnecessary when it comes to buying a mutual fund.

How do no load funds advisors get paid?

Loads may be charged upon purchase of fund shares (front-end load) or upon the sale of fund shares (back-end loads). These loads are paid to the broker for selling the fund (or advising an investor to the buy the fund). Mutual funds that do not charge loads are known as no-load mutual funds.

What is the best no load mutual fund?

Best no-load mutual funds: Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) Vanguard Value Index Admiral Fund (VVIAX) Vanguard 500 Index Fund (VFIAX)

Can I buy American funds without a broker?

The F1 share class of all American funds is now available commission-free on the Fidelity and Schwab online brokerage sites. Presumably, American will eventually offer its funds through other discount brokerages. This is a big deal. The American funds offer a wide lineup of good funds.

What is the advantage of buying a load fund?

Advantages of Load Funds. Although load funds charge a commission, they are still preferred by some investors over no-load funds. Investors pay a commission to the financial intermediary that conducts research on the most appropriate mutual fund to invest in and makes an investment decision on behalf of the client.

Should I buy Class A or C shares?

This benefits the investor because Class A shares have lower annual expense ratios than Class B shares. Class C mutual fund shares are best for investors who have a short time horizon and plan on redeeming their shares soon. Investors cannot convert Class C shares to Class A shares, which have lower expense ratios.

Can I buy mutual funds without a broker?

How to Buy Mutual Funds without a Broker? One can invest in mutual funds through online and offline mode. The popular modes of investing in mutual funds are demat and trading account, through a bank, online portals like Upwardly, independent financial advisors and directly with the AMC.

What is a good expense ratio?

An expense ratio is the amount companies charge investors to manage a mutual fund or exchange-traded fund. A good low expense ratio is generally considered to be around 0.5% to 0.75% for an actively managed portfolio, while an expense ratio greater than 1.5% is considered high.

What is an disadvantage of buying a no load fund?

He suggested that in a declining market, no-load funds were more subject to withdrawals (no costs to bail out for the panicky investor). As a result, the fund would need to sell assets into the declining market in order to have cash for those redeeming. So as a result, they would do worse than the market as a whole.

What are the best funds to invest in 2019?

Top 10 most popular funds - September 2019
Rank Fund 3-year return
1 Fundsmith Equity 55.10%
2 Lindsell Train Global Equity 66.70%
3 Vanguard LifeStrategy 80% Equity 25.40%
4 Lindsell Train UK Equity 40.60%

What are the best funds to invest in right now?

Best index funds for February 2020
  • Fidelity ZERO Large Cap Index.
  • Vanguard S&P 500 ETF.
  • SPDR S&P 500 ETF Trust.
  • iShares Core S&P 500 ETF.
  • Schwab S&P 500 Index Fund.

What are the top 5 mutual funds?

Best large-cap growth funds as of March 2020
Symbol Fund 5-year average return
FTRNX Fidelity Trend Fund 14.82%
IMPLX ERShares US Large Cap Fund Institutionall Class 14.01%
LGILX Laudus U.S. Large Cap Growth Fund 15.38%
PRWAX T. Rowe Price New America Growth Fund 16.24%

What is a 12 b1 fee?

A 12b-1 fee is an annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund's expense ratio. It is generally between 0.25% and 0.75% (the maximum allowed) of a fund's net assets.

What is an upfront sales load?

A front-end load is a sales charge or commission that an investor pays "upfront"—that is, upon purchase of the asset. The percentage paid for the front-end load varies among investment companies but typically falls within a range of 3.75% to 5.75%.

What are the oldest mutual funds?

Oldest Mutual Funds Still in Existence
  • MFS Massachusetts Investors Fund (MITTX) 1924.
  • Putnam Investors Fund (PINVX) 1925.
  • Pioneer Fund (PIODX) 1928.
  • Century Shares Fund (CENSX) 1928.
  • Vanguard Wellington Fund (VWELX) 1929.

What is a deferred load?

Deferred Load. This is also known as a back-end sales charge and is imposed when an investor redeems shares. The percentage charged generally declines the longer shares are held. This charge, often coupled with 12b-1 fees, commonly serves as an alternative to a traditional front-end load.

Which mutual funds have the lowest fees?

Here are two of the cheapest mutual funds tracking the S&P 500:
  • Schwab S&P 500 Index (SWPPX): The expense ratio is 0.02%, or $2 for every $10,000 invested. There is no minimum initial investment.
  • Fidelity 500 Index (FXAIX): The expense ratio is also 0.02%. There is no minimum initial investment.