Load Vs No Load Mutual Funds. Rethinking Comparison

Comparing load vs no load mutual funds should involve a number of factors besides whether or not there is a load fee involved. Many investors choose loaded funds with the mistaken belief that if there is a commission involved a better investment choice will be made, and this is not true. A load fee is simply a commission to a broker or other salesman, who chooses the investments that your capital is used for. Sometimes these professionals may get a fee from you and a sales commission from the mutual funds you are directed to, so there is no guarantee that the advice you may be paying high dollar for is impartial, or even good investment advice. For this reason many investors choose no load funds instead, but then make the mistake of not comparing fund expenses and other associated investment costs.

When evaluating load vs no load mutual funds, you will need to determine whether you are comfortable doing the necessary fund research and evaluations. Most investors have the ability to make their own choices, and to do the work needed to find funds that are ideal for their investment purposes and goals. Paying a fee to someone else to do this is not only a waste of money most of the time, but can also cause you to lose capital if the advice you pay the fee for is not the best possible. Often investors choose these funds in the belief that they will perform better, but this is not always true. Instead you will need to look at all the relevant factors with each mutual fund, and then do the comparisons to find the right fund choices for your unique investment situation.

If you will be comparing load vs no load mutual funds, the load fee is relevant but it should not be the only factor that you evaluate. Fund expenses and fees will vary from one fund to the next, and some no load mutual funds may end up costing more even without a load fee, because the fund expenses are much more. Investing wisely means keeping the costs and expenses down, so more of your capital is put to work for you. The manager of the fund is also important, because every fund manager will have a different education and experience level.

Load vs no load mutual funds is a comparison that all investors should make. The generalization that all no load funds have lower fees and expenses, or that all load funds offer better performance, is no longer true. This has caused many investors to rethink the comparisons between these two types of mutual funds, and to evaluate each investment choice on a number of different criteria, rather than just the fact that the fund has a load fee or is a no load option. Taking the time and doing the research needed will show you that not all load or no load funds are equal, and while most no load funds do cost less this is not always true.