No Load Funds

Load and No-Load Funds: What Should I Know?

On the surface, it seems like an easy choice. Why pay a 1 percent to 81/2 percent front-end commission on a fund to some broker when you can buy a fund that doesn’t charge a commission? That’s the choice: “load” versus “no-load” funds.

But what looks like a simple exercise in decision-making really is more a reflection of the kind of investor you are.

Service vs. Self-Reliance
The issue here really is the degree of service you want.

A load fund, for example, generally compensates a financial professional to spend time with you at the beginning of your relationship, learning about your objectives and suggesting an investment program, keeping in touch with you and answering any questions you may have. In addition, there are often choices as to how and when to pay the sales charge.

This is particularly handy for busy people whose idea of investment tracking amounts to little more than an occasional call to their broker.

No-load funds, on the other hand, may appeal to you if you like to take charge of your investments — if you like to immerse yourself in monitoring what they’re doing and don’t need help with allocating assets or selecting individual mutual funds.

Are No-Loads Really No-Loads?
If the profile of the no-load investor sounds like you, remember that a no-load fund puts more of your money directly to work than a load fund does.

But all funds, even no-loads, have management and expense fees. And not all no-load funds are the same.

Some actually charge a small load, or a 12b-1 fee. That fee, as much as 1/2 of 1 percent of total fund assets, is used to cover advertising and marketing costs. You can determine whether your “no-load” fund charges something by scanning the fund’s expense-to-net-assets ratio, which shows how much of every fund dollar goes to expenses.

Knowing all the facts is one thing, but applying them to your individual situation is another. Don’t be afraid to ask for help in deciding whether load or no-load funds are right for you.

To learn more about this and other Investment strategies, call 800.637.0852 x245 or use the online appointment form and ask to schedule a no-cost, initial consultation with a financial advisor through CFS.

Securities offered through CUSO Financial Services, L.P. (CFS) are not NCUA/NCUSIF insured, not Credit Union guaranteed and may lose value. Financial representative is an employee of First Tech and registered through CFS. First Tech is affiliated with CFS. (Member NASD/SIPC)