Load vs. No-load. There are load mutual funds and no-load funds. A load fund is bought through a broker or salesperson who helps you with your selection and charges a commission load -typically but not always 8.5 of the total amount you invest. This means that only 91.5 of the money you invest is actually applied to buy shares in the pool. You choose a no-load fund yourself without the help of a broker or salesperson, but 100 of your investment dollars go into the pool for your account.
Which are better-load or no-load funds? That really depends on how much time and effort you want to devote to fund selection and supervision of your investment. Some people have neither the time, inclination nor aptitude to devote to the task-for them, a load fund may be the answer.
The load may be well justified by long-term results if your broker or salesperson helps you invest in a fund that performs outstandingly well. In recent years, some successful funds that were previously no-load have introduced small sales charges of 2 or 3 . Often, these low-load funds are still grouped together with the no-loads, you generally still buy directly from the fund rather than through a broker. If you are going to buy a high-quality fund and hold it a number of years, a 2 or 3 sales charge shouldn t discourage you. 8.3 Common Stock FundsApart from the money market funds, common stock funds make up the largest and most important fund group.
Some common stock funds take more risk and some take less, and there is a wide range of funds available to meet the needs of different investors. When you see funds classified by objective, the classifications are really according to the risk of the investments selected, though the word risk doesn t appear in the headings.
Aggressive growth or maximum capital gain funds are those that take the greatest risks in pursuit of maximum growth. Growth or long-term growth funds may be a shade lower on the risk scale. Growth-income funds are generally considered middle-of-the-road. There are also common stock income funds, which try for some growth as well as income, but stay on the conservative side by investing mainly in established companies that pay sizable dividends to their owners.
These are also termed equity income funds, and the best of them have achieved excellent growth records. Some common stock funds concentrate their investments in particular industries or sectors of the economy. There are funds that invest in energy or natural resource stocks several that invest in gold-mining stocks, others that specialize in technology, health care, and other fields. Formation of this type of specialized or sector fund has been on the increase. 8.4