The market in the last couple of years has been filled with doubt and losses. Yes, there have been some gains; but in general, the media is filled with news of doom and gloom. In the last few months, there have been a few glimmers of light. Knowing that the market is sluggish and people are not investing due to fear, a newer concept of a more broad no load funds program began. The studies over the years have shown than the load funds have not shown a higher level of performance as compared to the no load funds. If you are experienced or a beginner, you will be asking what the no load investor should know.
Mutual funds, as a whole, have offered a better mode of diversity. This is a priority when putting together a portfolio. With greater diversity you can help to ensure that any losses are balanced by the gains. Load funds have historically been the better quality individual and family funds. They have a better rate of return and have always been associated with a commission structure. While the returns might be slightly better, the commissions deterred many investors. No load funds have typically been the lower portion of the investment totem pole. Less return, but no commission. Mutual funds have always been a better method for investment due to the diversity and the fact that the investment is going straight to the core. The expertise and knowledge of the investment firm has been used to select the best funds with the most potential.
In November of 2009, one of the big investment firms introduced high quality individual and family investment groups in the no load category. While the purpose was to bring new business to their investment company, the concept started a cascade of competitive entries by other investment firms. More and more investment firms are entering the game with some of the best quality funds that are out there.
If you are considering investing there are a couple of things the no load investor should know. First, just because it looks good in today’s rates, doesn’t mean it is good. Do some work on your own and make sure the overall performance of the fund has had a longer term positive. Examine today’s rates and then the one, three, five and ten year performances. Another topic you need to investigate is any other potential costs involved with the no load fund. While there may not be a commission, there might be other costs. Typically these are referred to as management or custodial fees and are charged in an annual method. If you configure those costs as compared to a load fund, the difference could be a better bet to invest in a load fund.
If you are a novice investor and do not have the time to do some of the work yourself, you might initially hire the services of an investment counselor. You can get the basic ins and outs as well as some of the rules of thumb to use when pursuing your future investments.
