Funds |

When you begin to invest, one of the things you’ll have to decide is whether to invest in load or no-load funds. Many fund companies rely on intermediaries to help provide investors with advice on their funds. To buy these funds, you have to pay a sales charge, or "load."

There are several reasons why you might want to consider a load fund. For instance, some load funds offer the skills of an exceptionally experienced portfolio manager or a unique investment strategy.

Even experienced investors may appreciate the help of an investment advisor in sorting through the maze of mutual fund choices. The fund's load compensates investment advisors for their valuable services.

What’s more, there’s evidence that investors who buy load funds may achieve better results over time – because they tend to move their money around less. In a recent study by a large financial services research firm*, it was found that load fund investors reacted less to market activity than no-load fund investors. In other words, investors who bought no-load funds tended to try to time the market more, which is exceedingly difficult to do successfully and rarely improves investment performance.

Load fund investors, on the other hand, tended more to hold onto their investments throughout market volatility and remain focused on their long-term goals, rather than reacting to short-term market fluctuations and trying to time the market. They may have made sounder long-term investment decisions as a result of having had access to an investment professional.

* Source: DALBAR Financial Services Special Report: Quantitative Analysis of Investor Behavior.



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