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A "load" is a sales charge, attached to a mutual fund to pay for personal service. Load funds are typically sold through brokers, bankers and other advisors who charge a commission. In exchange for this extra service charge, they'll help you "kick the tires" and determine whether the investment is right for your portfolio. No-load funds, on the other hand, have no up-front sales charges. You typically call the fund company (or find them on the Internet), read the prospectus, and send in a check. There's no one around to tell you if it's a good idea or not. The lines between load and no-load funds are blurring. Fund companies used to stick to offering one type of fund or another. Today, many companies that traditionally sold load funds, such as Chase Manhattan Bank, are now beginning to offer no-load funds on a direct basis. And conversely, many companies that used to offer funds on a direct no-load basis are introducing funds that charge a sales fee. These funds are designed for those investors who want an investment professional to recommend a specific fund. Why all the blurring? Fund companies say they're just appealing to two specific classes of investors: those who rely on advisors, and those who buy them direct. So, with the availability of similar funds on a load or no-load basis, what should you look for when deciding between load or no-load? SaveWealth.com offers these tips:
Information from USA Today contributed to this report. Please contact SaveWealth for more information.
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Mutual funds are offered by prospectus only. Read the prospectus very carefully before investing or sending money. No specific recommendations or investment advice is intended by this article. Securities offered through American General Securities, Inc., member NASD/SIPC. AGSI and TPG are separate and unrelated companies. For more legal information, please click here.
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