What is low load mutual fund?

What is low load mutual fund?

Low load or low sales charge (LSC) – Low load funds charge a lower sales charge (up to 3%) when you buy your units or shares, and a lower redemption fee. Unlike a deferred sales load, you pay this fee to the fund (not to a broker). It covers the costs of redeeming your units.

What does low load mean?

a the usual amount borne or conveyed. b (in combination) a carload. 3 something that weighs down, oppresses, or burdens.

What is the difference between load and no-load mutual funds?

Load funds are mutual funds that charge a sales fee or commission. No-load funds usually do not charge any sales fee or commission, as long as you keep your money invested for a specified period, often five years.

What is load fund in mutual fund?

A load fund is a mutual fund that comes with a sales charge or commission. The fund investor pays the load, which goes to compensate a sales intermediary, such as a broker, financial planner, or investment advisor, for his time and expertise in selecting an appropriate fund for the investor.

What are the disadvantages of buying a no-load fund?

The main disadvantage of a no-load fund is the lack of professional advice and guidance. You are responsible for processing the transaction, including analyzing and comparing the available options.

Which better for most investors load or no-load fund?

You should generally buy no-load funds if you don’t use an advisor, but perhaps the most important reason for buying no-loads is to boost your returns by minimizing expenses. In most cases, no-load funds have lower average expense ratios than load funds, and lower expenses generally translate into higher returns.

What is the disadvantage of buying a load fund?

The main disadvantage of a load fund is the attached charges and commissions. These charges can be substantial, depending on the size and type of investment, and other factors. The costs diminish your investing power as they are deducted from your investment funds.

Are load mutual funds worth it?

The load itself really isn’t bad, but paying the load is bad. Mutual fund companies make money from ongoing management expenses, whether it’s a no-load or load fund. While some things are worth paying more for, loads are completely unnecessary when it comes to buying a mutual fund.

What is an example of a load fund?

Let’s assume you are interested in making a $10,000 investment in the Company XYZ mutual fund. If the fund has a 4% front-end load, then of the $10,000 investment, $400 ($10,000 x . 04) is paid to the fund company and $9,600 is actually invested in the fund.

What are the 6 types of mutual funds?

There are six common types of mutual funds:

• Money Market Funds. Money market funds invest in short-term fixed-income securities.
• Fixed Income Funds. Fixed income funds buy investments that pay a fixed rate of return.
• Equity Funds. Equity funds invest in stocks.
• Balanced Funds.
• Index Funds.
• Specialty Funds.

How do no-load funds make money?

The fund manager receives a small fee based on the fund’s growth. In other words, he makes money when the fund makes money. One easy way for a fund manager to survive on less fees is to reduce the turnover in the fund portfolio.

What is a disadvantage of buying a no-load fund?