No Load Mutual Funds or Not?

By Corin D. V.

There are basically two main types of mutual funds: no load mutual funds and load mutual funds. While a load fund charges fees such as set up fees or commission fees, a no load mutual fund does not charge any fees.

Just by looking at the definitions, you probably assumed that a no load fund is better. While I'm not telling you otherwise, you really need to understand the situation at hand to really get a grasp of it first.

When you invest in mutual funds, you are cutting out virtually all the time you would have otherwise needed to spend on research and the such. The fund manager does this for you and does it well with a properly diversified portfolio. Diversification is the key to reducing risk in your portfolio.

As with any kind of investment, you want to get the highest return possible. In order to do this, you need to maximize your direct return and minimize your expenses. Choosing no load funds will eliminate virtually all your expenses.

With load funds, you will supposedly get an above average return. Nobody can guarantee you an above average return. You could pretty much get an above average return just as likely with a no load fund as you can a load fund.

Sometimes, maybe even most of the time, the load fund can get you a higher return, but after you subtract the fee, it might be the same or less than the no load fund that doesn't charge fees.

Should you choose a no load or load fund? You would probably do better with a no load fund. By not paying any fees, you can make a lot more. If you want to increase the chance of making a higher return with a no load fund, choose a higher risk and less conservative fund. - 23222

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Choosing the best no load mutual funds isn't hard. Learn about the benefits of dividend mutual funds.