Load funds charge an upfront percentage of your investment to compensate the managers for their skill. If you have a three percent load, the fund managers would get 3% of your money and would invest 97%. No Load funds do not charge this type of management compensation. Most financial advisors tell you not to pay loads, they are a tremendous drag on performance and it is very hard to overcome.
What is the difference between "Class A" and "Class B" shares of a mutual fund?
Class A funds have a charge at the front end, Class B funds have a back end charge for redemption. The back end charge is sometimes waived if you leave the investment longer than a specified period. I recommend finding funds that do not have these types of charges. But if you really love the fund, buy the one where you can at least get out of the fee by leaving the investment for a while.
What are 12b-1 fees?
According to the SEC website
all funds charge management fees to run the fund. However, some also charge for their distribution and service costs. These are referred to as 12b-1 fees.
What is "Net Asset Value (NAV)"?
NAV is the price an investor pays for a share of a fund before any load or sales charge is made.
Which NAV does an investor pay or receive?
Mutual funds transact all share purchases and redemptions at the end of day NAV for all orders received that day.
You can compare mutual fund performance to each other net of all fees using the SEC calculator found at the following site:
What your thought for growth on a 3 yr. time frame investing $20,000.in SPY fund
Jack
Posted by: Anonymous | May 11, 2006 4:54 AM | Permalink to Comment