Search Investopedia

No-Load Fund

Filed Under » ,
Dictionary Says

Definition of 'No-Load Fund'

A mutual fund in which shares are sold without a commission or sales charge. The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission at the time of  the fund's purchase, at the time of its sale, or as a "level-load" for as long as the investor holds the fund. 
Investopedia Says

Investopedia explains 'No-Load Fund'

Because there is no transaction cost to purchase a no-load fund, all of the money invested is working for the investor. For example, if you purchase $10,000 worth of a no-load mutual fund, all $10,000 will be invested into the fund. On the other hand, if you buy a load fund that charges a front-end load (sales commission) of 5%, the amount actually invested in the fund is only $9,500. If the load is back-ended, when shares of the fund are sold, the $500 sales commission comes out of the proceeds. If the level-load (12b-1 fee) is 1%, your fund balance will be charged $100 annually for as long as you own the fund.

The justification for a load fund is that investors are compensating a sales intermediary (broker, financial planner, investment advisor, etc.) for his or her time and expertise in selecting an appropriate fund.

It should be noted that research shows that load funds don't outperform no-load funds.

Related Definitions

  •

    Exchange Privilege

    The opportunity given to mutual fund shareholders to exchange their investment in a fund for another within the same fund family at no additional cost. This privilege allows investors to ...
    Read More »

  • Load Fund

    A mutual fund that comes with a sales charge or commission. The fund investor pays the load, which goes to compensate a sales intermediary (broker, financial planner, investment advisor, ...
    Read More »

  • Load-Waived Funds

    A share class of a mutual fund that does not require its investors to pay fees (such as front-end loads). Owning shares in a load-waived fund is a benefit to investors because it allows ...
    Read More »

    • Net Asset Value - NAV

      A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share dollar amount of the fund is calculated by dividing the total value of all ...
      Read More »

    • Front-End Load

      A commission or sales charge applied at the time of the initial purchase for an investment, usually mutual funds and insurance policies. It is deducted from the investment amount and, as ...
      Read More »

    • Back-End Load

      A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value ...
      Read More »

    • Growth Fund

      A diversified portfolio of stocks that has capital appreciation as its primary goal, with little or no dividend payouts. Portfolio companies would mainly consist of companies with ...
      Read More »

    • Balanced Fund

      A fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of ...
      Read More »

    • Load-Adjusted Return

      A load-adjusted return is how much of a return an investor actually sees, after investment fees charged to buy and sell shares of mutual funds are subtracted from investment returns. If ...
      Read More »

    • No-Load Life Insurance

      A type of life insurance that charges much lower fees and expenses than conventionl life policies. This is due primarily to the absence of a commission for the selling agent. No-load ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions