No-load mutual fund

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No-load mutual fund

An open-end investment company whose shares are sold without a sales charge. There can be other distribution charges, however, such as Article 12B-1 fees. A true no-load fund has neither a sales charge nor a distribution fee.

No-Load Mutual Fund

A mutual fund that does not charge shareholders a sales charge or commission. Some no-load funds charge a distribution fee, which is a small percentage of the amount one invests used to cover the fund's costs. Other no-load funds, however, do not have distribution fees. Some investors prefer no-load funds because the total amount of their investment is used to purchase shares with little or no deduction. Studies have shown that no-load funds perform neither better nor worse than load funds. See also: 12B-1 fee.

No-load mutual fund.

You buy a no-load mutual fund directly from the investment company that sponsors the fund. You pay no sales charge, or load, on the fund when you buy or sell shares.

No-load funds may charge a redemption fee if you sell before a certain time has elapsed in order to limit short-term turnover.

Some fund companies charge an annual fee, called a 12b-1 fee, to offset their marketing costs. Your share of this fee is a percentage of the value of your holdings in the fund.

You may also be able to buy no-load funds through a mutual fund network, sometimes known as a mutual fund supermarket, typically sponsored by a discount brokerage firm. If you have an account with the firm, you can choose among no-load funds sponsored by a number of different investment companies.

Load funds and no-load funds making similar investments tend to produce almost equivalent total returns over the long term -- say ten years or more. But it can take an investor nearly that long to offset the higher cost of buying load funds.

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