siding calculator inverness siding types hawthorne woods replace siding install vinyl siding vinyl siding installation lake zurich .. Chicago Drug testing

How to Evaluate Load vs. No Load Mutual Funds

If you have been dealing with mutual funds for any length of time, you undoubtedly have faced the question of which is better: Load Funds or No Load Funds. If you are new to investing, "load" simply refers to the commission paid to the broker selling the fund. "No load" means there is no commission on the purchase or sale.

Most discussions in the past have centered exclusively on performance comparisons. Even rating services like Morningstar have occasionally chimed in with their opinion. However, rather than focusing only on performance, there are some other issues I consider far more important:

  • Who is selling load funds and why?

  • Who markets no load funds?

  • Which one is right for you?

    Who is selling load funds and why? Most load funds are being sold through brokerage houses, financial planners and Registered Representatives. With few exceptions, most of those folks operate on the basis of selling as much product as possible. They collect their commissions up front, as a back end charge, or both (usually in the range of 5 - 6%). Whether you make money or not is not their primary concern. What matters most to those operating under this approach is how often you buy-and thereby generate new commissions for them.

    Who markets no load funds? No Load funds are either marketed directly by the mutual fund companies or, more commonly these days, offered through discount houses like Schwab, Fidelity, and many others. The advantage to this is that you have an unlimited choice of funds in one place and don't have to open separate accounts for each mutual fund family that you are considering.

    Most fee based investment advisors, like myself, have independent relationships with such major discount firms and are able to offer clients just about any no load mutual fund available. They receive no compensation from the firm and only get paid by the client at a pre-determined fee arrangement. Under this arrangement, there is no hidden motivation to sell you a particular fund or to try and sell more in order to get a larger commission.

    Which one is right for you? Whether you prefer dealing with someone selling load funds or an advisor getting you into no loads, let me make one thing very clear: You can make money or lose money either way! Why?

    Let's assume for the moment that there is no difference in performance between the types of funds-some of either kind will do well and some of either kind won't. What then determines the successful outcome of you buying either a load or a no load fund?

    The key is the advice you're getting. And the fact is that many brokerage houses and Registered Representatives tend to be more interested in their profits than yours. Their investment advice is generally centered around Buy and Hold or dollar cost averaging and similar financially questionable recommendations. Hardly ever will you receive advice about when and why you should exit the market, either because of accumulated profits or to limit your losses. Getting out of the market is simply not in their best interest, though it may be in yours.

    I must confess that, as a fee based advisor, I am somewhat biased and I prefer no load funds for my clients. I believe that this type of arrangement is best for all parties involved. It allows me to avoid any conflict of interest and to work exclusively for my clients' financial benefit. And the better my clients do, the better I do.

    I am able to choose no load funds and make buy decisions solely on the basis of my mutual fund trend tracking methodology. Following its signals, I can get clients into the market or out of it as often as is necessary to maximize profit or protect assets. And because I work with no load funds, other than a very occasional short term redemption fee, there are no transaction charges no matter how many times we move into or out of the market.

    If market conditions dictate that we stand aside in a money market for an extended time in order to avoid a bear market (as was the case from 10/13/2000 to 4/28/2003), I can advise that because it is in the best interest of my client. I am always thinking about what will benefit my client, not worrying about lost commissions. (Please see my article "How we eluded the Bear in 2000" at http://www.successful-investment.com/articles12.htm.

    Bottom line: Load fund vs. No Load mutual fund shouldn't be the issue. Having a methodical plan and reliable advice as to when to buy and when to sell is far more important and will help you to secure a prosperous financial future.

    ? by Ulli G. Niemann

    About The Author

    Ulli Niemann is an investment advisor and has written about methodical approaches to investing for over 10 years. He avoided the bear market of 2000 and has helped countless people make better investment decisions. Subscribe to his free newsletter: www.successful-investment.com; ulli@successful-investment.com

    In The News:

  • It Cant Be Done

    Wouldn't it be nice if you were only in the... Read More

    Why Buy and Hold?

    Since I can remember, and that's a long time ago,... Read More

    Can?t Stand The Heat

    It seems that every day I turn on the TV... Read More

    Its Better

    Question: How does it get better when it gets worse?Last... Read More

    Is The Bear In The Cage?

    For the last few weeks we have seen the stock... Read More

    Stops Make Money

    During the day I watch CNBC-TV, the stock market channel.... Read More

    Living Trust Investing: Income Considerations when the Grantor Dies

    A common problem I often see when working with living... Read More

    A Funny Thing Happened on the Way to the Stock Market

    On the 40 year journey through the turmoil of a... Read More

    NASDAQ 800?

    In November of 2000 when the NASDAQ was trading at... Read More

    VooDoo Training For the Stock Market

    If you go to Haiti or other places in the... Read More

    The Inside Scoop on Mutual Fund Rip Offs

    The bear market that showed up at the end of... Read More

    Understanding the Bulls and the Bears

    If you've ever flipped on the television to CNN Financial... Read More

    Performance Funds

    Mutual funds are doing more and more to discourage investors... Read More

    The Secret Method to Selecting a Winning Trading System

    Every successful trader has a winning system. There are of... Read More

    I Love To Lose Money

    Well, not really. What I mean is I don't mind... Read More

    Getting Even

    I know there are a lot of you out there... Read More

    Catnip of the Stock Market

    I have watched my cat play with a bag of... Read More

    Pamplona, the Wild Investment Bulls

    You remember (they show it on TV every year) the... Read More

    Market Experience of a Na?ve Stock Operator

    Sometime in the third quarter of 1997, someone told me... Read More

    The Information Age

    It is wonderful to be alive in the information age.... Read More

    More Window Dressing

    Two weeks ago I wrote about what the Securities and... Read More

    Analyst Reports

    When you become interested in a stock or mutual fund... Read More

    The Problem With Hedge Funds

    Are hedge funds a suitable investment for you? Hedge funds... Read More

    Investing in Dividend Paying Stocks

    I was recently interviewed for a press release through a... Read More

    Bad News is Good News

    For weeks, no, months we have been bombarded with nothing... Read More

    energy saving led light bulbs outdoor led lamps Pete's produce ..
    energy saving led light bulbs outdoor led lamps Pete's produce ..