Loaded Information

Ever wondered how the distributor or agent who sells you a mutual fund runs his business? How do you think he makes his living? One might probably assume that the fund companies pay him a certain amount, a commission maybe, for selling their funds. Well, the distributor does get a certain commission, but it doesn’t come from the fund company, he earns it from the investor. This commission comes in the form of a charge known as load. The distributor has to bear expenses to run his business and a part of it is paid by the investor. The load is also the reason why the investor’s entry price is higher than the fund’s NAV. The difference in the entry price and the NAV is the charge called load. But how is the load cha

This article was originally published on July 29, 2008.