Zero-load explained

Zero-load refers to a mutual fund that charges no commission or sales charge.[1] Instead of using a secondary party shares are generally distributed directly by the investment company. Research has shown that there is little difference in the performance of zero-load funds in comparison to load funds.[2] However, as an investor in a load fund has to pay out fees to buy in or out, a load fund must perform better in order for the investor to get the same outcome. This means that in essence a zero-load fund starts the 'investment race' with a headstart.[3]

Notes and References

  1. Web site: No-Load Fund Definition . Investopedia . 2009-02-15 . 2012-08-06.
  2. Web site: Should you carry the load? . Morey, M . 2003 . dead . https://web.archive.org/web/20100617002240/http://webpage.pace.edu/mmorey/publicationspdf/shouldcarry.pdf . June 17, 2010 . A comprehensive analysis of load and no-load mutual fund out-of-sample performance, Journal of Banking & Finance, Issue 27, pp1245–1271
  3. Web site: Load vs. No-Load Funds - Mutual Funds Center - Yahoo! Finance . Finance.yahoo.com . 2012-08-06.