No Load Funds

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.
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When it comes to no load funds there are two types of asset allocation, and these are passive or active asset allocation. Each of these types may be right for some investors, and many no load funds use the active style. Asset allocation is an important component of investing, and will affect the portfolio performance. A diverse portfolio with many asset classes will normally perform better than one that is limited in diversity. This is because while some sectors of the market are falling others are normally rising, balancing out the results and reducing the risks because of market volatility. One drawback that the active strategy has is that there are more trades within the portfolio, and this can drive up the costs. The passive method will allocate the assets and then leave them alone most of the time.
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What is asset allocation? This is a method used by investors to help minimize the investment risks, and it is done by diversifying the investment portfolio. If you want to start investing, one of the first concepts you will need to understand is how asset allocation can help you create a diverse portfolio which usually does better,has higher returns, and experiences fewer losses. Diversity means spreading your investment assets across a number of categories, and these will usually include stocks, bonds, and cash, among other asset categories. There is no ideal allocation of assets in any portfolio, instead this factor will depend on each individual investor. Because every investor has different goals and acceptable risk levels, the final asset allocation will be different for each investor.
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What are 12b-1 fees, and what should you know about these expenses? These are fees which are charged by a mutual fund as a distribution or marketing cost. This charge is a legitimate expense for the operation of the mutual fund, and it will be listed in the expense ratio for the fund. 12b-1 fees can be charged by both load and no load funds, but they can not exceed one percent of the net assets of the fund at the most. These expenses normally range from one fourth of one percent to one percent, depending on the specific mutual fund chosen. Some funds may not charge this fee, and many use the proceeds from this cost to pay commissions. For investors who choose no load funds this information may come as a surprise.
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