We also employ some of the best-managed load fund families that have created Advisor Class shares, with low operating expenses and no load. Advantages of Institutional Funds Low Cost Institutional class no-load mutual funds are an important part of our investment strategy. Access to these funds adds substantial value to our services. Not all no-load funds are necessarily efficient for you. Institutional funds do not spend money on this kind of marketing, but rely on educating professional advisors about their research, analysis, and trading techniques.
Administrative costs are another big item.
It takes lots of computers, phone lines, mailing costs, service representatives, printing, advertising, etc. to run a retail fund. Those services are priced into the retail fund's expense ratio, but are not incurred by institutional funds. Drift Many retail funds lack investment focus. Their charter allows them to invest in any securities anywhere anytime. A growth fund might decide to buy a few large company stocks, a few emerging markets stocks, a few convertible bonds, a few micro cap stocks, and a few Japanese banks.