Why would anyone ever buy a fund with a load?

Question

Are there any benefits to buying a mutual fund with a load?

Answer 1

This is the most wonderful question I've read so far on this site!!

No load means no help! Load means help. Why do you think that you can invest in mutual funds without the help of a professional experienced advisor. Why do you think you can do this yourself. I know the answer. Because the media has brainwashed you to think that you can do mutual fund investing on your own. Why have they done this? Very simple! The no load industry through advertising supports the media. Most load funds do not advertise. They rely on investment advisors to sell their funds. The load is simply the compensation that the advisor receives for guiding you.

To assist you in understanding the meaningful benefit of an advisor it would help if we examined investment results of the past. The average no load mutual fund investMENT has averaged over the years a little better that 10% The average return on the no load mutual fund investOR is approximately 4%. Why? Simple. The average no load investor is left to his own emotions and whims and buys and sells at inappropriate times.

The cost of paying a load to an advisor is a microscopic price to pay for GETTING IT DONE RIGHT, not MAKING THE BIG MISTAKE and not becoming a CRISPY CRITTER.

I hope i did not come on too strong with my answer. Some times I get a bit too emotional. I have been helping investors buy mutual funds since 1982 and I guess I am in love with what I do! I take my advice and help quite seriously. If you wish to chat with me please feel free. My email address is [e-mail]. If you would like my investment advice I would love to help you as well.

Answer 2

Well American Funds is one of the largest mutual fund companies and the only mutual fund company to consistently beat the index and to also have less volatility.
1. They have a commitment to low operating expenses (they do not advertise at all),
2.They believe in fundamental research ( when the market dropped from march 2000 to September 2002 American Funds was one of the only mutual fund companies to increase their research budget) Other companies like Fidelity and T Rowe Price cut their research budget and increased their advertising budget.
3. American Funds has only 30 Funds. They have never closed a fund. Unlike Fidelity, T Rowe Price, Vanguard who will commonly close funds if their track record was less than stellar
4. When most funds lost money during the bubble bursting American Funds came out almost un scaved because their managers are paid on a 3 year and 5 year return. So you do not have the common portfolio cheating, which hurt many mutual funds in the early 2000's. Cheating is that every manager has discretionary money which can be invested anywhere. Most Mutual fund managers loaded up on Tech stocks to inflate their funds short term returns to later be hurt in the long run. That is why they are a long term value oriented firm. When they buy a stock they are wondering what it will do in the next 3 years or 5 years? Not what it will do next year.
5. Accumulating is the regular season and retirement or pulling income is the post season. American funds also have low volatility which means most of their income funds have generated returns beater than the S & P 500 with lower volatility. If you started pulling 5 % of your account from American Funds in 2000 you would have been fine.
Also most people do not realize that some funds although no load do have fees. For Example the Vanguard Windsor fund had excess trading costs of 5% last year. Trading costs are a hidden fee that most common investors do not even realize. Vanguard passes these costs on to the investors since they do make money like all the other companies.

Answer 3

Easy answer.

Usually the load is in the form of a redemption fee. If you subtract the load from that fund's performance and it still outperforms a similar no-load fund then the benefit is the difference in performance.

Load Fund 5 year performance 10% - Load of 2% = 8%
No Load Fund 5 year performance 7% Load of 0% = 7%
In this case the advantage goes to the load fund.

Answer 4

You wouldn't buy a load fund if you're a self-directed investor. You would only buy a load fund if your financial advisor directed you into it. The load gets split between the advisor and the fund, and is considered part of their compensation for advising you. If you're self-directed, you can almost always find a no-load equivalent of any load fund out there. The only reason you'd buy a load fund on your own is if there is no no-load equivalent. This used to be common, but not any more.

Answer 5

if you are just starting to learn the stock market and need help from a broker then this is the way to start. There are some winners out there with loaded funds but oince you start getting the hang of it get out of them and move to no load funds you will be better off.

Answer 6

There is no advantage of buying a fund with a load. People who buy a fund with a load just fell for a sales pitch, that's all.

Answer 7

Loaded money are for suckers. everyone could purchase the undercover agent (S&P 500) which will beat 80% of mutual money over the long haul AND purely has a 0.10 price fee. definite undercover agent shares are costly ~a hundred and fifty yet even if in case you could purely purchase 7 shares at a time your fee to purchase is way less then a million% making use of 10$ as commerce costs.

Answer 8

The load funds will argue that they deliver superior returns, but the with the handicap of the load fee dragging on your return, I agree that no-load funds are the only way to go.

Answer 9

I don't think anyone should buy a fund with a load.

But the funds with a load say that first, they have exceptional management, and second, the load prevents excessive churn.

Answer 10

i don't care if my funds are with load or not, as long as it makes the most money for me.