A mutual fund is an investment company that offers investors an interest in a professionally managed portfolio of investment assets. The company sells shares of itself and the proceeds are then used to buy various stocks, bonds and other securities that comprise the fund's portfolio. Because a variety of investments make up the fund's portfolio, mutual funds help reduce investment risk through diversification. A load is the sales charge an investor pays to buy shares of a certain mutual fund. When a mutual fund is sold as a no-load fund, there is no sales charge applied and the investor pays Net Asset Value for a share of the fund.
Loaded funds charge a sales charge, usually when an investor buys shares of a fund.
However, some funds have a deferred sales charge or back end load, that investors pay when they sell shares. No, mutual funds do not guarantee any rate of return , and you may lose money invested in a mutual fund. Each mutual fund has its own specific goals and investment objectives. While some funds take on additional risk in return for greater potential return, others will incorporate a more conservative investing approach. There are a number of tools to help you identify your investment profile and risk tolerance .