Difference Between Load and No load Mutual Funds

A mutual fund can be defined as an investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments. It is the fund manager who manages the mutual fund and there are certain charges associated with mutual fund which are called load. A mutual fund can be a load or no-load mutual fund.

A load mutual fund is one which charges the investor investing in mutual fund purchase price for the shares/units purchased plus an initial sales fee. This charge is typically anywhere from 2% to 5% of the amount investor is investing or it can be a flat fee depending on the mutual fund provider. It can be of 2 types one is Back-end loads mutual fund in which fee is charged when an investor redeem the mutual fund and other is front-end load in which fee is charged when investor buys the mutual fund.
A no-load fund implies that an investor you can buy and redeem the mutual fund units/shares at any time without a commission or sales charge.

After looking above classification one can say that it is better to buy no load mutual fund and avoid load funds but it is not the case because many studies have shown that both types of mutual funds offer the same return.

0 comments… add one

Leave a Comment

Related pages

accounting concept meaningdebit card disadvantagescapital budgeting advantages and disadvantagesnondurable goods listcross cheque definitionindustrial goods examplesfull form of repo ratefees earned but unbilled3 golden rules of accountingdisadvantages of a command economyasset revaluation reserve journal entriesunearned revenue entrydrawbacks of venture capitalwhat is direct and indirect quotationconsignee agent meaningpros and cons of mixed economic systemwhat is unearned income in accountingrevaluation of assets journal entrycost push inflation definition economicspros and cons of mergers and acquisitionsnormal good inferior gooddecentralized business structureprofitability ratio formulasdrawer draweedifference between tariff and taxdifference between complimentary and complementarydefinition of unsystematic riskunearned rent revenue adjusting entrycheque definedifference between import tariff and import quotaadvantages and disadvantages of fifoadvantages and disadvantages capitalismwhat is command economy advantages & disadvantagespros and cons of mixed economic systemquota and tariffexamples of law of diminishing returnsbill discounting meaningcost based pricing advantages and disadvantagesadvantages of lifo methodconcept of materiality in accountingagro based industry definitionadvantages of discounted cash flowwhat are some disadvantages of centrally planned economiesadvantages of autocratic management stylecharacteristics of oligopoly market structurewhat is privatisation in economicsmonopolistic characteristicsmerits of advertisementmeaning of discounting of billsdisadvantages of paybackwhat is the difference between debentures and sharesadvantages of merger and acquisition pdffreight means in hindiwhat are the characteristics of a command economywhat is conservatism concepttypes of cheques crossingtypes of monopolistic competitionadvantages and disadvantages of money market mutual fundsexample of conglomerate integrationwhat is the meaning of trial balanceadvantages and disadvantages of a planned economyadvantages and disadvantages of decentralisationunsystematicdemerits of decentralisationfdi and fiipricing strategies advantages and disadvantagescharacteristics of an oligopolyaccounts receivable and unearned revenueadvantages and disadvantages of hedge fundswhen is the trial balance preparedarbitrage fund meaningconsignee consignor meaningsubstitutes in economics examples