Whats the advantage to investing in no-load mutual funds or low-load mutual funds?
Investors should realize that: • A load is a sales commission that goes to the seller of the mutual fund shares; • A load does not go to anyone responsible for managing the fund’s assets and does not serve as an incentive for the fund manager to perform better; • Mutual funds with loads, on average, consistently underperform no-load funds when the load is taken into consideration in performance calculations; • For every high-performing load mutual fund, there exists a similar no-load or low-load mutual fund that can be purchased more cheaply; • Loads understate the real commission charged because they reduce the total amount being invested: $10,000 invested in a 6% front-end load fund results in a $600 sales charge and only a $9,400 investment in the mutual fund; • If a load mutual fund is held over a long time period, the effect of the load, if paid up front, is not diminished as quickly as many people believe; if the money paid for the load had been working for you, as in a no-load f
