No Load Mutual Fund : What You Should Know About No Load Mutual Fund

No load mutual funds, are they for you? If you are not sure of what they really are, then you should put some efforts to understand them first. Whether you are investing on your own or through a third party agency, understanding what they are before investing would be really essential. So what is the load of a mutual fund? A load is a fee charged when an investor invests in a mutual fund. There are basically two types of load when buying mutual funds, they are front-end load and back-end load. A front-end load is a charge incurred when you purchase a mutual fund whereas a back-end load is a charge incurred upon the sale of the mutual fund. Loads are usually paid either to the agency who refers you to the mutual fund or to the fund house itself. In contrast, mutual funds that do not incur load are known as no-load mutual funds.

However, people usually get confused whenever they are buying mutual funds. They always think that when buying a fund that does not charge anything upon transaction is a no load fund. Seldom do they realise that they are charged (back load) in the end whenever they redeem their funds. These are the mistakes many people make when they are dealing with mutual funds. An actual no load mutual fund does not charge anything whether it is entry or exit.