ANSWERS: 1
  • Mutual funds are available in load and no-load funds. A load is a sales commission paid to your broker or financial adviser.

    Front-End Loads

    If a mutual fund has a front-end load, you pay a commission (usually 3 percent to 6.25 percent of the amount invested) when you buy shares of the fund.

    Back-End Loads

    For funds with back-end loads, you pay a commission of usually 3 percent of the value of the shares when you sell them.

    Why Choose Load Funds?

    With load funds you have a broker or financial adviser who helps you decide on a fund and invest your money.

    No-Load Funds

    With rate of return and all other things being equal (and they usually aren't), you will make more money with a no-load fund because you aren't paying a commission. However, you are on your own to choose a fund, or you must pay your broker or financial adviser in some other way.

    Considerations

    Mutual funds (both load and no-load) may also have other costs. Many funds have 12b-1 fees, also known as marketing fees, distribution fees, service fees or hidden loads. All funds have expenses to cover and have trading activity costs. Some funds have a redemption fee when you sell. You need to read the prospectus and consider all these fees, along with your investment objectives, when choosing a mutual fund.

    Source:

    Load vs. No-Load Funds

    Buying Mutual Funds: Load or No-Load?

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