No-Load Fund
Categories: Investing, Managed Funds
On a mutual fund, index fund, or other fund, loads are the commissions you pay to the people who manage and sell you your fund. So, no-load fund suggests free stuff, right? No commissions?
Not so fast.
It's really just a marketing phrase that's supposed to make you think you're getting a free lunch. In reality, you still end up paying money for your fund—it's just sneakily hidden as a yearly management fee. Instead of paying a 2–5% commission up front and then having an investment management company manage the money for 0.8% a year in management fees, no load funds charge 0% commission up front, but then investors pay 2% per year in management fees.
Over time, it can end up costing more than the funds that charge you up front.