no-load fund
A mutual fund that does not charge a sales commission, allowing the full investment to be put to work immediately.
Example
“Vanguard's no-load index funds allow investors to put 100% of their money to work without paying broker commissions.”
Memory Tip
NO-LOAD = no sales commission. 100% of your money is invested immediately.
Why It Matters
No-load funds help investors keep more of their money working in the market since there is no upfront sales commission eating into their initial investment. This can result in meaningful savings over time, especially for larger investments, making it easier for everyday investors to build wealth without paying intermediaries.
Common Misconception
Many people assume that no-load funds have no fees at all, but they still charge annual management fees and expense ratios. The term specifically refers only to the absence of sales commissions, not the elimination of all costs associated with owning the fund.
In Practice
If you invest 10,000 dollars in a load fund with a 5 percent sales charge, only 9,500 dollars goes into investments while 500 dollars goes to the broker. With a no-load fund, your full 10,000 dollars is immediately invested, and over 20 years at 7 percent annual returns, that extra 500 dollars working for you could grow to approximately 1,935 dollars more in total value.
Etymology
NO (without) LOAD (sales charge). A fund with NO sales commission LOAD.
Common Misspellings
Start investing with no commission trades
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