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No Load Mutual funds vs Load Mutual Funds
Mutual Fund Bullet Tour Page 5The controversy over load vs no load mutual funds rages on. But it was really settled long ago. The facts deliver the message loud and clear. - Even the best load funds cannot overcome the effect of their loads and beat their no load counterparts.
- For every load fund there is a similar no load fund with superior performance net of all expenses.
- A load is a sales commission, plain and simple.
- Most load funds are also encumbered with high 12b-1 fees which further impairs their performance.
- Most 12b-1 fees in excess of 0.25% are paid as "trails," sort of a perpetual commission.
- Loads, being sales commissions, create an inherent conflict of interest.
- There are so many different ways that loads are charged (and they're not always labeled loads) that it's often very difficult if not impossible to calculate return until shares have been redeemed. This may not be coincidental.
- Mutual funds that assess a load of 3% or less are classified as low load. Although their performance may not be impaired to the same degree as full load funds, they're still load mutual funds.
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