How do I distinguish a low-load mutual fund from a load mutual fund?
It is best to stick with no-load or low-load mutual funds, but they are becoming more difficult to distinguish from heavily loaded funds. The use of high front-end loads has declined, and mutual funds are now turning to other kinds of charges. Some mutual funds sold by brokerage firms, for example, have lowered their front-end loads to 5%, and others have introduced back-end loads (deferred sales charges), which are sales commissions paid when exiting the mutual fund. In both instances, the load is often accompanied by annual charges. On the other hand, some no-load mutual funds have found that to compete, they must market themselves much more aggressively. To do so, they have introduced charges of their own. The result has been the introduction of low loads, redemption fees, and annual charges. Low loads—up to 3%—are sometimes added instead of the annual charges. In addition, some funds have instituted a charge for investing or withdrawing money. Redemption fees work like back-end loa
