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The mutual fund industry has designed many different load structures. You usually get to make a choice about how to take your load, even within the same fund, because many load funds offer several different classes of shares.
Class A shares have a front-end load; Class B shares have a back-end load. Class C shares have small, if any, front or back loads, but they have a steady annual 12b-1, or level load.
The four types of mutual fund loads -- front-end,
back-end, level and no-load -- are described here.
Trying to decide between buying a load versus a no-load mutual fund? Read "Buying mutual funds: load or no-load?."
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Types of mutual fund loads |
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Select one of the tabs to view the information on the types of mutual fund loads.
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Associated
with
No-load funds have only one class of shares.
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Definition
A mutual fund without a sales charge at the time of purchase or sale, and with a 12b-1 fee of 0.25 percent or less.
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Advantages
All your money goes directly into your investment.
There's no penalty for taking your money out and moving it somewhere else; you make your own choices.
And if you do go to a financial adviser who is compensated some other way (like, you pay him or her an hourly fee) you don't have to worry that he or she will be unduly influenced by the size of the commission from putting you into one fund versus another.
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Disadvantages
A no-load fund might have higher management fees than a load fund. But make sure to check, there's no guarantee of this.
Because brokers don't sell these funds and the companies have to appeal directly to the general public, some no-load funds advertise heavily, with those costs passed along to the purchaser.
You're on your own: Unless you're paying an adviser in some other way, you probably won't have access to expert advice on these funds.
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Beware
No-load doesn't mean "no expenses." Even no-load funds have management fees, marketing fees, administrative fees, redemption fees, trading costs and more. Always check the prospectus and consider all costs.
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When to buy a no-load fund
When you find a no-load fund that meets your investment objectives as well as, or better than, a similar load fund.
When you've checked and made sure the various other fees you're being charged don't add up to something comparable to what you'd pay for a similar load fund.
When you either don't need help or you're compensating your adviser in some other way.
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