2007-03-03 02:43:43 · 5 answers · asked by treefrog 4 in Business & Finance ➔ Investing
I, too, disagree with Rob...wholeheartedly. In fact, studies have shown that, on average, load funds have slightly higher expense ratios than no-load funds. Expense ratios for funds are easy to find, so you know exactly what you're getting, expense-wise, and can easily compare.
Just to clarify for TreeFrog, ALL funds have expense ratios--you just want to find a fund with an acceptable one (average is about 1.5%, so anything below that is decent). SOME funds have loads. Loads are just commissions taken out of your investment and paid (eventually) to the broker/advisor. IMO, the only reason to buy a load fund is because you're getting NEEDED advice from your advisor. Otherwise, just learn the basics, buy some good no-load funds (there are many), and you'll likely do better in the long run than you would have with the expensive load funds.
2007-03-03 05:14:04 · answer #1 · answered by LongArm 3 · 2⤊ 1⤋
This is an investment fund that has no initial commision or sales charge when purchased and sold. There is however a management fee that can range from 1 to 5%. The lowest cost funds are called index funds. These mirror a well known index such as the Dow or S&P 100
2007-03-03 10:55:59 · answer #2 · answered by speewah2002 1 · 1⤊ 0⤋
Gotta disagree with Rob D. Being that he's a financial planner of some sort, he does have a bias. Those loads go to pay planners and salesman.
Some load funds offer a lower annual management fee in return for paying a high up-front load. If you stay in the fund long enough (like more than 15 years) it might be worth it. But most likely you will want to switch to a different fund before you get to the payoff point.
Magazines like Forbes recommend to never buy a load fund.
2007-03-03 12:48:02 · answer #3 · answered by Quixotic 3 · 1⤊ 1⤋
No load means no transaction fee up front when you buy or when you decide to sell. But, most funds charge a yearly manager fee around 1%
2007-03-03 10:52:18 · answer #4 · answered by Anonymous · 0⤊ 1⤋
What they don't tell you is that "no load" normally means "higher expenses." There are some exceptions, but in the long run, no-loads are the most expensive way to purchase mutual funds. Phone reps and advertisers don't work for free.
2007-03-03 11:05:33 · answer #5 · answered by Rob D 5 · 0⤊ 4⤋