No Load Mutual Fund - Index Mutual Funds

By: Muna wa Wanjiru

There are many different mutual funds that people can invest with. These different funds will for the most part have certain loads that will be given. These loads will also include no load mutual funds. The interesting aspect of a no load mutual fund is the lack of large fees that you as the investor needs to pay to the company. There are lots of examples of no load mutual funds today but the most reliable one is still the Index Mutual Funds.

This is the first mutual funds group which utilized the no load mutual funds tag for the benefit of their customers. Where the other mutual funds have various charges that you will have to pay as a result of the load, the no load mutual funds in stark contrast are lacking in these customer fees. Besides these differences the load funds do not work as well as the no load mutual funds in the long run.

The no load mutual funds are distributed directly to the customers by the investment company. As there is no middle group to work the mutual funds you as the investor will have no need to worry about sales commissions. The premise behind a no load mutual fund is that all of the money that you invest in the fund will work entirely for you.

This is contrary to that of the other loads. In these loads only part of your money is invested into the mutual funds. The remainder of the money will be used as the sales commission of the mutual funds investment group. As an example of the difference between these two funds is illustrated below.

In a load mutual fund you could invest for instance $10,000. The mutual funds company that you are using will however invest only $9,500. The remaining $500 is used as a 5% sales commission charge. At the end period of your investing if a 10% funds return was made the load fund would only have produced $10,450 for you. Now the no load mutual fund works differently.

In the no load mutual funds you invest about the same amount. That is you invest $10,000. The investment company will invest the entire $10,000 into the mutual fund that you have chosen. At the end investment period the no load mutual funds which could have a 10% funds return will yield to you about $11,000. As you see the no load mutual funds is more beneficial to the customer as there is no secondary party to take part of your money away.

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