No Fee Mutual Funds There are numerous different mutual funds, thousands and thousands of them, in fact. Not just that, but there are tens of sorts of mutual fund companies too. Most of the different kinds of funds differ in what they invest in. For instance, a general fund may invest in anything and an African fund may merely invest in African companies or companies that are active in Africa. Then there are sector funds that may only invest in up-to-the-minute technology stocks or alternative technology or precious gems. There are also funds that track indexes: for instance a NASDAQ 100 tracker fund, which would have in its portfolio all the stocks that are in the NASDAQ Exchange top 100 and in the same proportions. Lastly, a different category of mutual funds is in its charges: that is, how the fund makes charges for administration and profit. These charges are known as 'loads'. One interesting sort of fund are the so-known as 'no fee mutual funds' and one of the best types of no fee mutual funds are the 'index funds'. Index funds were the first sort of finance tool to bring in the concept of 'no fee to the benefit of the investor. No fee mutual funds tend to perform better for the investor because they leave more money in the pot from day one, which gives that money the opportunity to increase for the entire length of the plan. One feature of most no fee funds is that the investor deals directly with the investment firm, which means that there are no financial adviser's fees - no middlemen - to pay. The broker's fee could be very high, say 10%-20% of a lump sum investment or a whole year of monthly instalments. This money is split, often 50-50, between the investment firm running the no fee mutual fund and the investor. The investor's part goes back into his investment fund, which means that it will go on working for the entire length of the plan. So, how does the investment firm make its income? Well, it has its fee the same as it usually would have; the only person who loses is the adviser and the only one who gains is the investor. The investment company gains nothing instantly, but it does in the long term How? Well, a different aspect of the investment company's fees is the annual management charge. This management charge is a percentage of the funds under management, so if your investment pot is larger, so is their charge. There are also true no fee mutual funds where all your money is invested from day one - each penny of it with no commission deducted at all. This is all very well, but the investment firm has to make money for itself somehow, so you will almost certainly find that percentage rate for the annual management charges is higher. If you are interested in investing in any kind of mutual fund, take advice first from a professional financial adviser, but do your own research as well.
Remember that a broker does not usually charge a fee for investment advice because the investment firm that he sells to you will pay him with your money. Therefore, if there is no kick-back, he is unlikely to recommend them and that includes no fee mutual funds. If you need financial advice, it is better to pay for it by the hour and get decent advice - nothing is for nothing and that is especially true in the financial world. Owen Jones, the author of this article, writes on a number of subjects, but is now involved with No Load Mutual Funds. If you would like to know more, please go to our web site at Mutual Funds.