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How do no load mutual funds work?
No load mutual funds are mutual funds that are sold directly by the investment company instead of by an investment broker. They work exactly the same as regular mutual funds.
What is the definition of a no load mutual fund?
A no load mutual fund is a mutual fund that does not charge a commission or sales charge. This means that you don't have to pay a fee to invest or withdraw your money, and all of your money will go to work in the mutual fund. A no load mutual fund means that there is no or very low fee charge for the fund. These are typically lower than loaded mutual funds.
How do you change from one mutual fund to another?
If both funds are in the same fund "family", you can do an "Exchange". Else you have to sell the fund you own, wait to get the proceeds, and buy the one you want. You can either do this directly with the mutual fund company/companies, or via a brokerage account, such as Scottrade, Fidelity, etc. Brokerage accounts can charge additional fees to buy/sell mutual funds, and they typically have categories of funds, like "Fee" and "No Transaction Fee" (NTF). The advantage of using the brokerage account is convenience - to be able to have all of your investments tracked in one place, the ability to sell funds without having to have the money mailed to you, and the ability to buy funds without filling out any "application forms". The advantage of dealing directly with the Mutual Fund companies are the absence of extra fees, and the ability to make automated monthly investments. Certain funds have trading restrictions and/or fees for "short-term selling", which means that you need to hold funds for a certain period (like 90 days, for example) in order to sell without restrictions. Check your funds prospectus for more information before selling. Mutual Funds also have a minimum investment amount, so check that the amount you have to invest is greater than the minimum before you sell your prior investment. There is also a class of Mutual Funds called Load funds that charge you a fee when you buy and sometimes when you sell them. These funds are typically sold through a financial planner, where the planner gets all or a portion of the fee. Load funds have been shown to underperform no-load funds because of the fees associated with them.
What are the disadvantages of mutual funds?
Disadvantages of mutual funds compared to owning securities outright - 1. Mutual funds charge you an annual maintenance fee as a % of assets, and in some cases a sales load too. Holding individual securities there is no charge once the broker fees are paid. 2. When you buy shares in a mutual fund, you don't officially own the securities held by the mutual fund. While this has little practical significance, I suppose in theory there could be problems of some sort. The risk of anything happening is small and shouldn't keep you from buying mutual funds for this reason alone. 3. Sometimes a mutual fund's investment philosophy changes over time without you being aware of it. You may buy a fund thinking they are a diversified fund and then two years, its drifted toward certain sectors or certain parts of the market. By the same token, sometimes a mutual fund starts participating in derivative markets and increasing its leverage, which introduces additional risk you should be aware of. 4. Changes in mutual fund management can bring changes too - sometimes they aren't as savvy (or as lucky) as prior management.
What are the main differences between ETFs and Mutual Funds?
The truth is you need to invest in the fund that will make you the most money. Look at rankings monthly Both ETFs and Mutual Funds allow for broad diversification or narrow sector concentration (e.g., industry, country, foreign currency, debt instead of equity) by a purchase of one single holding. They can be described as "baskets of stocks" that have some kind of common "theme." There are however several main differences: ETFs trade on exchanges like stocks and can be bought and sold at any time during the exchange trading sessions, although some of them may be extremely thinly traded. Mutual Funds, on the other hand, have to be usually redeemed or purchased only at the Net Asset Value, based on closing prices for the day. Thus, if there is a negative event, you cannot use an automated sell stop and have to ride the prices all the way to the day's close. Nevertheless, the problems with liquidity under normal economic conditions are very rare with Mutual Funds. Unlike many Mutual Funds, ETFs do not have minimums to invest, minimum holding periods or early withdrawal fees. Mutual Funds are likely to have different classes of shares A/B/or C, which may have to be held for a certain minimum time to avoid fees when selling (sometimes 2 to 3 years, or more). Both ETFs and Mutual Funds deduct managerial and operational expenses from your (growing or shrinking) investment, but when compared especially to Load Mutual Funds, ETFs on average have lower such deductions. ETF trades, on the other hand, will be garnished with brokerage commission fees. However, nowadays, at discount online brokers they are almost negligible. Highly liquid ETFs, those with large daily volumes, are complemented with options that trade on Options Exchanges. Such options may be useful in hedging larger or riskier positions. Mutual Funds are not optionable. Mutual Funds usually cannot be bought on margin or sold short by an investor. This can be done easily with ETFs. Also, all ETFs are available through almost any broker. That is not always true about Mutual Funds that have specific agreements with different brokerage houses. Unlike Mutual Funds, ETFs may be highly leveraged, buy on margin or trade options, employ short selling, or use complicated derivatives to achieve, for example, inverse performance of given indices (e.g., SKF). This may be useful for anybody wanting to employ leverage in IRA or 401K accounts. Sources: http://www.amfi.com/ratings/mutual-fund-rankings http://www.investopedia.com/university/mutualfunds/mutualfunds.asp
What are the two primary types of mutual funds?
The two primary types of mutual funds are "no-load" and "load" funds
How do no load mutual funds work?
No load mutual funds are mutual funds that are sold directly by the investment company instead of by an investment broker. They work exactly the same as regular mutual funds.
What is a non load mutual fund?
A no-load mutual fund is one that does not charge a fee to investors. Many mutual funds have a "load" or initial fee, often around 5%, that investors must pay in order to buy in to the fund. No-load mutual funds lack this fee, and earn money for their managers in different ways. Most index funds are no-load funds.
What are no-load mutual funds?
No-load mutual funds do not require investors to pay fees or sales commission, and the price of a share in a no-load fund is identical to its net asset value
You wish to invest in mutual funds and am currently doing research into the various terms related to mutual funds Can someone tell you what is a load and no-load fund?
A load fund is a mutual fund that charges the investor a percentage of the NAV on entry or exit. This charge is decided by the mutual fund provider. The amount is used by the provider for advertising and distribution purposes and is included in the purchase as a sales fee. Additionally, load funds may be differentiated into back-end and front-end funds depending on when the fee is charged. For a back-end fund, the fee is charged when the mutual fund is redeemed and the front load is charged on purchase of the fund. A no-load fund is simply a fund that does not charge any commission or sales charge. This is possible because shares of such funds are distributed directly by the investment company. In the long run, load as well as no-load funds offer similar returns. However, no-load funds do charge a fee if they are redeemed before their maturity.
Can I purchase no load mutual funds online?
Yes, You can purchase no load mutual funds online. All of the major companies of which you would have heard (Vanguard, T Rowe Price, Fidelity, etc.) and offer some of the better no load mutual funds all have websites and allow you to purchase online.
Where can you buy mutual funds?
You can buy it at a no load mutual fund company. An example of this kind of company is Vanguard. One can also seek advice from other people on where to buy mutual funds.
Where can one find articles to learn about the best no load mutual funds?
Articles to learn about the best no load mutual funds can be found from many different resources. Some online resources with these articles include Investopedia and Kiplinger.
Where can I find more information about no load mutual funds?
Forbes is a great source for all financial info, they even have a mutual find newsletter.
What is the definition of a no load mutual fund?
A no load mutual fund is a mutual fund that does not charge a commission or sales charge. This means that you don't have to pay a fee to invest or withdraw your money, and all of your money will go to work in the mutual fund. A no load mutual fund means that there is no or very low fee charge for the fund. These are typically lower than loaded mutual funds.
What are no load funds?
Generally mutual funds charge an entry load of 1-2% of the investment amount everytime an investor makes an investment in their fund. Similarly they charge an exit load of 1-2% when the investor redeems his investment within a certain timeframe. No load funds are those that do not charge either an entry or an exit load.
What are N class mutual funds?
N Load meaning can be mutual fund family specific. But in general, it means this fund is for large retirement plans only.
