No Load Mutual Funds Pros and Cons
No load mutual funds allow you to make investments without having to pay brokerage commissions. While “no load” literally means no sales charge, load mutual funds will come with a price tag of sales commission attached to them. No load mutual funds could usually be acquired directly from investment companies without going through any middle parties that normally charge brokerage fees on your investments.
Similarly to any investment, no load mutual funds carry a list of pros and cons that this article is going to discuss.
With no load mutual funds 100% of your investment portfolio is working for you since you do not have to pay any transaction fees or charges.
A classic “no load mutual fund” does not charge you any fees either up front when you buy investments or back loaded when you sell them.
According to financial statistics, no load mutual funds regularly outperform its load financial mutual funds competitors and, at times, show significantly greater returns due to no financial fees that essentially reduce overall investments.
But is everything as bright as it seems with no load mutual funds or do they come with any other type of preloaded fees?
We already know that there are absolutely no transaction fees on no load mutual funds, however, investment companies do have to make money somehow and they do this through a number of custodial, advisory fees or annual percentages paid on total asset values.
If you are a novice investor or an extremely busy person who simply has no time to research which domestic or best international mutual funds to buy into, “no load mutual funds” might not be right for you. You might be initially better off in a load mutual fund guided by a professional broker or investment advisor.
While deciding which best rated mutual funds to put your money into, it’s important to remember that if you decide to go with a load mutual fund it has to provide you with an added value, service or performance to compensate for transaction fees.