Mutual funds have always been the darling of the investment arena. They offer the diversity that the investors are looking for when considering a balanced portfolio and the gains have been fairly consistent. Mutual funds have also been a nice variation from the requirement of the individual to be a market guru. Mutual funds are selected by the investment firms and therefore they have done all of the background work in seeking the top quality funds. In the past, the average mutual fund was associated with a commission cost. As an investor, you were paying a price to the rep or investment firm for their expertise and guidance in choosing the investment with the best return. These were called load funds. The downside to those selections was that the gain was always offset by the commissions that had to be paid. So what are no load mutual funds?
No load mutual funds are investments that did not require any commission payment. They were usually not the top quality picks, but did quite well as an investment. There have been studies to show that the load funds did not out perform no load funds. However, the same studies did show that, over a period of time, no load funds did better. The selection was just not as good. Without the commission, the no load mutual funds offered a nicer option for return on investment.
In the last few years, the market in general, has been sluggish. The bad days didn’t seem to balance the good days. In 2009, one of the top investment firms announced that they were introducing some of the top mutual funds and family of funds into the no load category. While this announcement seemed to come in like a lamb, it is exiting as a lion. Now the every day investor had a selection of some of the best mutual funds with the highest returns, and without the costly commissions.
It took a few months, but as of the first quarter of 2010, a number of other investment firms are joining the competition. The no load mutual funds selection has become the elite selection for the investor and more money is being funneled into those choices. Since the market needs the money, the no load mutual funds are helping to kick off a nice, slow uphill gain. More and more investment firms are adding quality selections to their no load mutual funds programs. This is now having the appearance of a total gain vs. a disastrous bubble.
There are some things to watch out for. While the investment firms are listing a lot of no load mutual funds, you need to investigate what are called managerial or custodial fees. These are fees, usually charged annually on the no load mutual fund investment. In some cases, the fees can be so high that it makes the investment of the no load fund a loss when compared to a load fund. Do not fall for a smoke and mirrors situation. Do a bit of homework before you invest your hard earned money. Education is your best asset when addressing the question of what are no load mutual funds.
