What is the benefit of buying a loaded mutual fund?

Answer 1

Well, you can use the cost of the load as a cost deduction.

Otherwise, there is no particular benefit. There are some very good funds which are only available through a load, but there are equally good performers which are available without a load.

I suppose that since a load fund is available only through a broker, some people might consider a broker's advice of some value. However, I wouldn't be one of those people.

Answer 2

Over time there are some loaded mutual funds that are cheaper from a fee standpoint than funds without loads. When you evaluate the fee structure of a mutual fund you have to look at both the load as well as the internal fees that are present in all mutual funds. I'm not going to talk about specific funds but there are loaded funds available where you pay a 5% load up front and then annual internal fees of .75% of total assets. Over 5 years the total amount of expenses would be 5 + .75(5) = 8.75% of total assets. On the no load side take a fund that has a 0% front end load but has annual fees of 2%. Over 5 years that fund would be 0 + 2(5) = 10% of total assets. In this particular scenario you would pay 1.25% more in total fees in a no load fund than you would in a loaded fund. This scenario is not true for every loaded fund and no load fund but it is a possible scenario. The easiest way to see this is in checking out the prospectus of a fund that offers you the option of choosing a front load or a no load option. Compare the fee structure of the funds and you can do the math. Good luck

Answer 3

There may be two.
1) Their total return over many years is high and consistent.
2) The investor has access to a Fund Family with a large number and variety of individual funds