what are no-load mutual funds, and how they work?

Question

whoever is answering please be a litlle especific because i dont know anything about it and i'm really intrested .

Answer 1

I recently pass the NASD Series 6 exam. Basically a no-load fund is where you don't pay any sales charge to invest your money. There are no sales force or an agent to help you explain the mutual fund. So, if you want to obtain information about the mutual fund, you have to call them up to obtain a prospectus.

To pay for its costs such as distribution, marketing, advertising, the fund charges those expeses aginsts its gross investment income. Where as in loaded funds, the underwriter of the fund pays for those expenses, not the mutual fund.

No-load funds has redemption fees. A redemption fee is a percentage charge against the investor at the thime he/she redeem the shares. The redemption fee is stated in the prospectus. Also, no-load funds has higher management fees than load funds.

With all these fees and expenses, you can conclude that no-load funds has higher operating expenses than loaded funds. So, its up to you what you want to do. Do you want pay the sales charge on loaded funds or accept higher expenses that can affect the rate of return on your portfolio?

Answer 2

Mutual funds are baskets of stocks put together by a manager, the value is figured out by adding up all the stock values and deviding by the Number of mutual fund shares to get NAV (net assett Value.)

Some mutual funds are sold with a load (commision to buy, or sell, or both) Some load funds will "Forgive" the commision, if the fund is held for a certain number of years.

Front end load, you pay a commision (3-9%) when you buy the fund....Back end load you pay a percentage when you sell the fund

Some funds (usually at banks) do not charge commisions and are said to be "NO LOAD FUNDS"

All funds will charge an "MER" (Management Expense Ratio)
this is a fee charged monthly to manage the fund and pay the commisions for buying and selling the stocks within the fund.

You do not see this charge, it is just an amount of money that is deducted from the total value of the fund before the share price is calculated.

Load funds are not better than No-load funds, independat statistics have shown this

Answer 3

While you're likely to get a rousing seal of approval in this forum, "no-load" can often be a misnomer. "No-load" means there is no "load," or sales charge added to the share price.

The reason for loads is to compensate advisors for marketing the fund. If there's no one selling the products for it, the company has to market them itself. These costs are included in the expense charges of the fund. Advertising isn't cheap, and those phone reps don't work for free.

As a result, no-load funds normally have the highest expense charges. For many fund companies, in the long run, no-loads are the most expensive way to invest. Also, you lose valuable investment analysis and advice that many advisors may offer at no cost.

Answer 4

No loads are funds that you don't have to pay any money to purchase or sell them.

Some funds have fees added, either at the purchase time or when you sell them. These fees are called "loads".

No loads are better for you to buy because your money goes to purchase shares and not to pay fees.

You still have to be aware of maintenence fees and any other yearly fees charged to your funds.

Answer 5

No value to investment analysis - load funds should never be bought. Do not focus on trying to understand this minutiae. It is just an excuse not to get started NOW. Closed end funds & etfs are often better than even no load funds. ADX PEO EFA IAU EWA PGY all solid example. Start today!