Load Mutual Fund question...

[Orsorum]

If a fund has a 1% front load, does that mean they take 1% of both your initial investment and any subsequent dividend payouts that get reinvested, or just the initial investment?

 

[CPA]

I believe it is just the initial investment. Any reinvested dividends should be safe. Probably should call them up and ask though.

Why would you think about getting a load fund, when there are plenty of good no-load funds?

 

[Orsorum]

Looking at an ultra-short term gov't bond fund, currently yield is around 5%... the category average is around -0.2%. Do you know of any comparable no load funds?

 

[FeathersMcGraw]

Originally posted by: Zakath15
Looking at an ultra-short term gov't bond fund, currently yield is around 5%... the category average is around -0.2%. Do you know of any comparable no load funds?

Of course, a 1% front-loaded fund yielding 5% is equivalent to a no-load fund with a yield of 4%.

Also, fees can be assessed both on initial and subsequent purchases (which automatic dividend investments may or may not be classified as). The only way to be sure is to read the fund prospectus (but you should have been doing that already).

 

[Orsorum]

Originally posted by: FeathersMcGraw

Originally posted by: Zakath15
Looking at an ultra-short term gov't bond fund, currently yield is around 5%... the category average is around -0.2%. Do you know of any comparable no load funds?

Of course, a 1% front-loaded fund yielding 5% is equivalent to a no-load fund with a yield of 4%.

Also, fees can be assessed both on initial and subsequent purchases (which automatic dividend investments may or may not be classified as). The only way to be sure is to read the fund prospectus (but you should have been doing that already).

I've just been doing some light research, haven't looked indepth into any particular fund just yet. 😛

 

[dirtboy]

1% of all money going in. Not dividends, capital gains, just 1% of your money that goes to them. No 1% to withdrawl, which woudl be a back end load.

 

[Orsorum]

Originally posted by: dirtboy
1% of all money going in. Not dividends, capital gains, just 1% of your money that goes to them. No 1% to withdrawl, which woudl be a back end load.

I know that much, 😛.

NTSMX and HFTSX look like pretty good short term muni funds, low expense ratios, 3.25% yield or so... eh. More research to do.