But I don't think those are your real choices. I simply don't see any reason why a well informed, intelligent investor should pay a sales commission to buy a mutual fund. Certainly anyone who is up to reading our newsletter, or a handful of other mutual fund newsletters, is capable of recognizing and finding good funds without paying for that service from a broker whose interests are almost inevitably in conflict with the interests of the investor. But I am getting ahead of myself. Let's look at 10 reasons to avoid load funds.
Load fees do the investor absolutely no good.
Any mutual fund is really just a pool of money that's managed to accomplish some particular objective such as income or growth, usually following a particular strategy. A load is simply industry jargon for the commission paid to a salesperson who brings in the money. The commission you pay on a load fund goes only to the salesperson or sales organization, not to the fund's manager or investment adviser. Managers and advisors make their money from fees taken out of the fund's assets. Whether investors pay loads or not, they all pay their share of management costs.