A no-load fund charges no sales commission. Typically, the mutual fund firm that sponsors the fund is the investor’s source for this kind of fund. These firms often sponsor entire families of no-load funds, each with a different investment objective, philosophy, and style.
Some of the better-known mutual fund families, including T. Rowe Price, Fidelity, Janus, and Vanguard, offer a wide array of no-load funds, one of which is likely to be an appropriate and attractive investment for you.
When you invest in a no-load fund, you skip the middleman — the sales agent — and therefore save the money that would otherwise go to pay his commission. You don’t have to meet with or speak to a broker or salesperson; instead, you call the mutual fund company, ask for an application and informational brochures about their funds, and then send in a completed application form with your check. If you invest $1,000, the entire amount begins working for you, with no deduction for any load or commission.
Is there any significant downside to choosing a no-load fund? Not really. Some investors prefer load funds because they like having an ongoing relationship with a broker or other financial professional who can advise them from time to time. By contrast, with a no-load fund, the investor is on her own; she can call the fund company to make transactions or to request publications, but she can count on speaking to a different representative every time she calls. The investment performance of load and no-load funds is the subject of many research studies. In virtually every study, no significant difference is apparent. In other words, investors who paid sales commissions of 5% or more for load funds did not enjoy noticeably better investment results. Because you can invest your money with equal profit in either a load or a no-load fund, why not save some of your hardearned cash by considering only no-load funds for your portfolio?
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