Funds and Shares

I am sure this has been posted before, many times before, but I'll ask again since this is an on-going debat I have with a friend as well as a topic I can't say I ever feel certain on.
1. How does a load/no-load fund compare to Class A, B, etc. AND can no-loads be purchased within an IRA or 403b? I understand A, B, C....shares so I am looking for how a load/no-load compares to the A, B..
2. Do all fund companies offer no-loads?

I'd like to understand this completely so as I'd like a reply with your personal preference I'd also be open to any reads out there that will help me understand.

Basically, is a class A share the same as a load fund and a class B share like a no load fund. My friend is always referring to class A share like it is a load fund.
Previous post is still on the table for clarification.
Thank you.

I have no idea waht your talking about with the class A and B. Ive heard of class A and B stocks. But I do know that a share and a fund are 2 different things. So a share cant be the same as a fund. when you invest in a fund you are buying shares.

yes, most of the majors offer no load funds.

C'mon articledon!!! You have no idea what a class A or B share is???
For someone that understands personal finance can you please help me with my question.
Class A, B or C, etc. in say american funds amcap fund is what I'm referring to.

I'm talking 1MO's approach and being very assertive so no offense articledon.

I have no idea waht your talking about with the class A and B. Ive heard of class A and B stocks. But I do know that a share and a fund are 2 different things. So a share cant be the same as a fund. when you invest in a fund you are buying shares.

be very careful who you take financial advice from.

In his post he ask if a class A share is the same as a load fund. I answered no, a share and a fund are not parralells like that. Which is correct..... And I didnt give him any advice on this matter.


Check the history, Ive never claimed to be an expert. Just someone on my own financial journey.

FYI, I didnt say that I had no idea what a class A share is. Just not familiar with your application of the term in ref to no load and load funds.

be very careful who you take financial advice from.

articledon, you have made my point. thank you, sir.

NITB, without debating the merits (too much) of loads vs no loads, here is a stab at a basic answer for you.

there are pretty much 4 types of funds. A, B, C, and "Funkydelic". i wont address funkydelic funds since they are normally for 401k and other retirement planning vehicles. normally, you cannot buy them unless you buy them through an institution to institution arrangement (like in your 401k). that said, and to be complete, they are normally the ONLY true no-load fund on the market.

so, i have just implied that all other funds (A, B, C) are load funds ... is that right? yep! it is!

however, there are certain "arrangements" that can avoid a load on each of the ABC share classes.

(NOTE: everything here is "generally speaking". which means that some fund companies may do things slightly ... heck, even TOTALLY different. however, as a debating rule of thumb with your friend, this is accurate.)

lets start from the end and work forward. a C share will have a low load (usually 1-2%) if redeemed in the first seven days after purchase. after that, there is no sales charge and it operates as a true no load. that means, no up front sales charge but higher annual expenses for fund management.

a B share will have a standard load that is paid NOT at purchase, but rather on redemption. this "redemption period" may be as long as 8 years or even more. so, you pay no up front sales charge (if you keep it long enough) but you pay a higher annual operating expenses. most B shares will convert to A shares given enough time.

a A share (commonly known as a "preferred share") has a load up front but has lower annual operating expenses. loads are generally in the 5-6% range but there are breakpoints meaning you pay a lower percentage when you have invested certain amounts of money - meaning at 50K you may only pay 4.5%.

special bulletin: there are certain fee arrangements whereby you can get an A share without paying the load. this is not common but an advisor can outline how to do this. that said, usually if you are getting the preferred share with no load, you are paying more in the separate fee arrangement with the advisor. this is not good or bad, just an interesting tidbit.

in theory, a long term investor is generally going to pay LESS when using B shares but everything needs to work perfectly. what usually happens is that people with B shares will make a change in their portfolio and end up paying the deferred sales charge.

in reality, a long term investor is going to pay LESS when using A shares. they receive rights of accumulation and rights of transfer as part of ownership in the investment company that is the mutual fund.

finally, no ... not all mutual funds come in A, B, and C shares.

So when my friend says he will never buy a load fund or he thinks load funds are dumb and just a way to screw the investor he would only be able to invest in class C shares (assuming no redemtion before 7 days). Could the assumption be made he has no retirement investments since he only talks in load and no load language and not A,B, or C language? OR is it me that needs to understand that load and no load is in fact the same as A, B, etc. but just a different way of saying it? He seems/pretends to know a lot but I question his depth of knowledge since his talk is more of a regurgitation of other peoples thoughts and not his own indepth anaylsis.
1MO, thank you.

So when my friend says he will never buy a load fund or he thinks load funds are dumb and just a way to screw the investor he would only be able to invest in class C shares

I think when your friend says he doesn't buy funds with loads, he mean any loads. AB or C.

He is like me, I prefer not to use a salesman to buy quality funds. I prefer no load funds with very low expense ratios. There are many good fund companies that offer no-load funds.

I believe that the only thing you can control in your investments is the cost of them. We cannot control the managers or the ups and downs of the market. We can control our expenses.

Others say it is stupid not to buy a loaded fund because they think they get a better return. That isn't always true. There are funds that beat the index and there are funds that are lower than the index. How do you know which ones will be on top this year?

I suggest you borrow some books from the library. The first one I read was "Mutal funds for dummies" I learned a lot.

Good luck with yoru investments.

So when my friend says he will never buy a load fund or he thinks load funds are dumb and just a way to screw the investor he would only be able to invest in class C shares (assuming no redemtion before 7 days).
Yes. And from my perspective, while he may think loads are dumb ... I reserve the right to think some(one)thing else is kinda dumb.

Could the assumption be made he has no retirement investments since he only talks in load and no load language and not A,B, or C language.
No. You can have your Roth IRA (a retirement account) in any share class - load or no load. He can also be using quasi-funky investments (especially Defined Benefit Plans) that use loads or no-loads.


OR is it me that needs to understand that load and no load is in fact the same as A, B, etc. but just a different way of saying it?
Yes, this is exactly correct.

footloose:

I think when your friend says he doesn't buy funds with loads, he mean any loads. AB or C.

this is unlikely in the extreme. what it means is that his friend is possibly using B shares with no intent to sell prior to the termination of the CDSC ... or ... more probably he is using exclusively C shares.

He is like me, I prefer not to use a salesman to buy quality funds. I prefer no load funds with very low expense ratios. There are many good fund companies that offer no-load funds.

you say potAto, i say pOtato. your bias (which is your right by the way) is showing when you use the term "salesman". that said, i am proud to say i am in the sales industry. that said, i sell those things that my clients wish to purchase and i ensure they understand the issues and understand the pro's and con's in their decision making process. i would submit that my clients would see me more as an educator first and foremost. i would further submit that my clients have a better understanding of load and no load funds than you exhibited in your previous post.

He is like me, I prefer not to use a salesman to buy quality funds. I prefer no load funds with very low expense ratios. There are many good fund companies that offer no-load funds.

you create a difference without addressing the distinction:

i am glad you prefer no load funds with very low expense ratios.

there are many good fund companies that offer no-load funds! however, it is much more difficult to find "low expense" funds that are "good". it CAN be done though and i am not arguing this point. however, once you start adding multiple funds across families, you are really getting yourself into a sticky whicket if you dont understand what you are doing. i have often recommended UNDERPERFORMING funds as a part of a comprehensive portfolio. if a person doesnt understand why this is a great consideration, then perhaps they dont understand investing as much as they think they do. but hey, they dont have any salesmen to contend with.

In summary, "load funds" in an IRA would be A and B shares (B shares unless I said I will not sell this fund for 10+ years) while a "no-load" would be C shares. So, I have load funds since all my Roth IRA funds are A shares as well as my wifes TSA account.

I now know I am a load fund guy in my retirement accounts.
Thank you all very much. This was a successful post!!! And don't worry I will post many more question, no matter how dumb they might be.

footloose:
i have often recommended UNDERPERFORMING funds as a part of a comprehensive portfolio. if a person doesnt understand why this is a great consideration, then perhaps they dont understand investing as much as they think they do. but hey, they dont have any salesmen to contend with.

My parents thought the guy that sold them variable annuities to put in their roth accounts was an educator also. He sounded so friendly and informed. They would have been far better off using a target fund with no-load and very low expense ratio.

It is a good idea not to trust just anyone with your money because they sound so educated. Read all you can about investing. It's not all that hard to do it yourself. I like the following link. It has a great list of no-load funds that are the same as load funds.

http://mutualfunds.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=mutualfunds&zu=http%3A%2F%2Fwww.fundadvice.com%2Fexplode.html

We all have different ways we feel comfortable investing. After doing a lot of reading and research I feel better doing my investing without the middleman. If someone chooses not to learn about investing on their own then they are at the mercy of any educator they buy from.

I may use a fee only finacial planner whien I get very old, but as long as I can, I will do it myself and not pay anyone to do it for me.

My parents thought the guy that sold them variable annuities to put in their roth accounts was an educator also. He sounded so friendly and informed. They would have been far better off using a target fund with no-load and very low expense ratio.

you have me at a disadvantage since i do not know your parents. but rather than saying that pesky old salesman SOLD them a VA for their IRA, why dont you explain why they thought it was a good idea to do so?! at least that way we may find common ground. if you posted a reason that was certainly stupid, we would all cheer on your disdain for salespeople. however, what is more likely is that your parents found a good reason to do this yet had a little difficulty in explaining it to you ... someone who considers themself a "sophisticated investor". and then you probably tore them up about making such a stupid decision. now they feel like crap cause they know you and love you and would never imagine you would offer them uninformed advice (even though you dont understand the different shares of mutual funds) so they by default believe the pesky ol salesman took them for a ride.

now, i have never sold an IRA account inside of an annuity ... but you know what ... i can think of several reasons why doing so would be a good idea ... for the RIGHT person.

p.s. in England we call this penny-wise and pound-foolish:

I may use a fee only finacial planner whien I get very old, but as long as I can, I will do it myself and not pay anyone to do it for me.
you may want to consider using this strategy for your insurance needs as well. wait until the day you die before you get any life insurance. no need to pay those pesky premiums a day earlier than necessary!

by the way, the fee only planner will probably charge you 10 times the price you would pay now. today, he only has to clean up a little mess. by the time you are old, the mess is HUMONGOUS! so, the price deserves to be HUMONGOUS as well.

by the way, i was gonna get some toilet paper on the way home tonight but after considering your post i dont think it will truly be a critical issue till around lunchtime tomorrow. so, i think it prudent to wait till i really REALLY REALLY have a need.

by the way, i was gonna get some toilet paper on the way home tonight but after considering your post i dont think it will truly be a critical issue till around lunchtime tomorrow. so, i think it prudent to wait till i really REALLY REALLY have a need.
I thought you were going to go the route of printing these pages instead. :eek:

only if i misjudged my timeframe. :))

now, i have never sold an IRA account inside of an annuity ... but you know what ... i can think of several reasons why doing so would be a good idea ... for the RIGHT person.

I have no idea what he said to make them believe it was a good idea. They trusted him. They did not educate themselves on any of the basics of investing. I have spent the last two year reading all I can and from what I have read, putting an annuity in an ira is a very expensive way to invest for retirement. Of course I did not yell at them for doing it. I did suggest that they spend some time reading and learning about investing so they would be better informed. They never added any more money to that annuity.

I would like to hear why it is good to have a variable annuity in a roth ira. Maybe what I have read it worng. I am willing to learn more.

how about a 100% guarantee that you can never ever ever lose any money in your investments.

if that aint good enough, consider that those investments are two of the riskiest on the market. that on a good year they return 200% returns. on a bad year they lose 50% of their value. however, each and every high water mark locks you in for an account value equal to that new gain. how much would you pay for this feature? i mean, if you were earning an average annualized return of 40% over a 10 year period would you be willing to pay 5% to get that protection? 10% to get that protection?

how about this, perhaps you have enough in your IRA so that you know you will be able to live your life in dignity and never ever be a burden on anyone ever. but you have JUST ENOUGH. you are not rich, you just acted responsibly and you saved your whole life for retirement. however, you really cant afford to lose anything at all! but you still need to make enough to stay up with inflation so some level of market participation is prudent. how much would you pay to have your IRA fully protected? 2%? 3%?

the answer is you can have this feature for less than 1/2 of 1% ... but ONLY with an annuity.

by the way, the fee only planner will probably charge you 10 times the price you would pay now. today, he only has to clean up a little mess. by the time you are old, the mess is HUMONGOUS! so, the price deserves to be HUMONGOUS as well.
REALLY have a need.

Well then, good for me. If it is humongous, then I must have done a good job on my own. I must have made a few million with my investments. Now I just need someone to put them in order and send me acheck once a month. When I am 80, I will look into it.

I would like to hear why it is good to have a variable annuity in a roth ira. Maybe what I have read it worng. I am willing to learn more.

so after i spell out a couple good reasons, your only response is:

Well then, good for me. If it is humongous, then I must have done a good job on my own. I must have made a few million with my investments. Now I just need someone to put them in order and send me acheck once a month. When I am 80, I will look into it.

i am not sure that implies a willingness to learn new concepts or not.

finally, a good advisor helps keep you from screwing things up. this results in greater earnings, lower taxation, and only assuming the level of risk that is needed ... vs. all the risk you can pile up. these are just a few benefits to an advisor. i understand and respect that you still want to do it yourself - which is your right. but i hope you were attempting to be cute as opposed to pedantic with the information i shared.

Not that anyone asked me, but I'll give a reason.

For many people, when it's all said and done, aside from their home, their IRA is their most valuable and important asset. Why wouldn't you want to insure that asset? This is something that all the annuity bashers out there forget about - many people are in fact able to put a price on their peace of mind, and for them, the cost of an annuity (i.e., insuring their retirement income) is worth it.

so after i spell out a couple good reasons, your only response is:



i am not sure that implies a willingness to learn new concepts or not.

finally, a good advisor helps keep you from screwing things up. this results in greater earnings, lower taxation, and only assuming the level of risk that is needed ... vs. all the risk you can pile up. these are just a few benefits to an advisor. i understand and respect that you still want to do it yourself - which is your right. but i hope you were attempting to be cute as opposed to pedantic with the information i shared.

I was waiting to respond after I talked to my parents again. I had other things that were more important to take care of.

My dad said that he was led to believe that only by using an annuity would the income be tax free. He was told that all funds had a 5.75% sales fee. (I suppose that the salesman meant that all of his funds had that fee.) The annuity also has a 2.75% expense ratio and a nice $35 a year custodial fee. So, it cost them a lot more than the .05% you mentioned. They would like to move it to a less expensive annuity at a different company but, would loose a ton of money. They will do a 1035 exchange when the surrender charge has been eliminated.

Why would an educator tell my parents that only an annuity could be put in a Roth? I guess to me it's salesmanship and he can make the most money if they sign on the dotted line. That's why I called him a salesman. Maybe you are different.

I don't find it a problem to keep my least tax efficient funds in my tax deffered accounts and my tax efficient funds in my taxable accounts. I don't find it difficult to tax-loss harvest when there is an opportunity to do so. I have lots of years to keep learning about my investments. There are lots of good books, web sites and investment forums. I don't want to be lilke my parents, who put there trust in someone else without educating themselves about the investing world.

hmmmm, if this is what your father was told then i would suggest that you hire an attorney and file a complaint. before you do so, please verify WITH the agent who sold you the product what he said. lets lean into the things you said that are CRAZY.

first, it was already TAX FREE because it was a Roth. why your dad thought he had to use an annuity for it to be tax free when he already had a roth that was tax free is beyond me. it is sorta like the shoe guy telling you that you need to buy his shoes because you dont have any shoes but you fail to look down and see you have shoes on already.

clearly not all funds have a 5.75 load ... if the salesperson said this ... he lied. he should be reported to his company and a lawsuit filed. again, i would ask the advisor to clarify what your dad understands when you meet with the agent.

if they want to move it while not incurring the surrender charge then they can START now. the annuity is likely to allow up to 10% penalty free surrender each year. move 10% per year to the "cheaper" annuity and transfer it piecemeal over time until the surrender charge is down low enough not to matter. in other words, a surrender charge of 3% on a 100K annuity might be a little hard to swallow. but if you got the accumulation value down to 10K then 3% is nothing!

note: we certainly do not fully understand what all was presented by the agent nor understood by your father. it is entirely possible that the agent spoke the truth and your father understood it accurately but with the passage of time the edges have blurred some. i neither believe that the agent was a thief or that your father is mentally impaired. i am ONLY commenting on it from the perspective of your father as you have explained it.

i said: the answer is you can have this feature for less than 1/2 of 1% ... but ONLY with an annuity.
footloose said: The annuity also has a 2.75% expense ratio and a nice $35 a year custodial fee. So, it cost them a lot more than the .05% you mentioned.
lets be clear here, first i said less than 1/2 of 1%. written as a decimal it would look like <.5 (not .05% which written as a decimal this would be .0005). this is an error the order of magnitude of 100 on your part!!!

next, your average annuity is going to have somewhere between 1.2 to 1.6% M&E charges. it seems EXTREMELY likely that your father's annuity has some "riders" on it. for those interested, riders are little "extras" that you can get. they are like leather seats or a 6-CD changer for your car. if you want em, get em. but you dont need them to get the car (or the annuity). of note is that your agent does NOT get paid any more or any less for having a rider on the annuity. so, if you have these riders, for which you are paying more than 1% extra for (which is pricey), then you got leather seats!!! the question is whether your dad wanted leather!!! but since the agent doesnt get paid more for selling you the leather option, this is implying to me that the agent was in fact looking out for your dad's best interests - at least on this point.

finally, in a variable annuity you have mutual funds in the separate and underlying account. to the best of my knowledge, annuities are always going to be offering "institutional" shares of those mutual funds. what this means is that if your average no load mutual fund has a 1.5 expense ratio but you are using institutional shares with an ER of .8 you have already "saved" .7. now you subtract that .7 off of the normal ME for an annuity which is 1.5 and you are getting an annuity for FAR LESS THAN 1%!!!

puhleeeese! dont even TRY to tell me that this is expensive given all of the benefits with an annuity!!!!

An annuity is just an investment vehicle inside an insurance company. The same people selling you whole life (bad investment) is selling you annuities (another bad investment). Look elsewhere to put your money.

How profound.

ichiroy, thanks for your intelligent contribution. however, to be precise:

The same people selling you whole life (bad investment) is selling you annuities (another bad investment). the subject and verb in a sentence must agree in number: singular nouns and pronouns take singular verbs; plural nouns and pronouns take plural verbs.

so, your sentence would be correctly structured if you wrote: The same people selling you whole life (bad investment) are selling you annuities (another bad investment). (of course, your point remains both invalid and flawed on its face.)

harbrace states that you can violate commonly accepted uses of punctuation and grammar if doing so is intentional and with a further defining purpose in mind. however, to do so out of ignorance is never a reason for error.

let's test what you have learned. can you answer this question for me?

can a modal auxiliary attached to the first verb in a compound predicate modify the second verb as well?

finally, for internet (or bulletin board) posting ... this is a good rule of thumb:

Simple Grammar Errors Cost You Credibility

When you're online, your words are your first impression. If you're building a business or a reputation as an online writer, it's important to present yourself well. Even casual, conversational writing needs good basic grammar.

Professional writing demands a higher standard, and publishers tend to reject error-filled manuscripts and submissions under the very valid theory that, if you were careless with the form of your writing, you were probably just as careless with the content.

Avoiding the most common grammar mistakes are a good start to showing your best both online and off.

zing!!!!!!

Hey Opai, since you think annuities are such great investments, I have some beachfront property in Arizona I'd like to sell ya. Call me at 1-800-U-SUCKER.

ichiroy, didnt you say in another post that you were in your 40s?

I am going to assume that what you are really asking is how does the performance of load mutual funds compare to the performance of no load mutual funds?

If you compare the load-adjusted performance of load mutual funds to that of no load mutual funds, I am sure you will find the performance of no load mutual funds to be superior. Of course, you can find or create a study to show almost any desired result. I think you have to look at the basics and evaluate what types of mutual funds are likely to produce better results.

All else equal, no load mutual funds should outperform load mutual funds due to the sales charges and the generally higher total expenses. Further, my experience has been that no load mutual fund families have better investment research talent than load mutual fund families. A stronger research staff should result in better returns.

Load mutual fund companies, on the other hand, tend to sell their mutual funds as a service rather than based on how their funds have performed or based on the talent of their research teams. You are not just paying for the investment manager; you are also paying the financial advisor. I could think of better ways to spend my money than to pay a broker to help me buy mutual funds.

As far your other questions are concerned, of course you can buy no load mutual funds in an IRA account and no all mutual fund companies offer no load mutual funds.

I hope this helps.

Michael A. Weiss, CFA
The Editor
The Mutual Fund Investor
http://www.mutualfundinvestor.net

That helps me out. I have been watching this thread looking answers.

shame on you michael! most of your post is simply poppy-cock.

lets take it real slow. please prove your following statement:

If you compare the load-adjusted performance of load mutual funds to that of no load mutual funds, I am sure you will find the performance of no load mutual funds to be superior.

we will work on the other stuff later, but like eating an elephant, lets do it one bite at a time.

"my experience has been that no load mutual fund families have better investment research talent than load mutual fund families"

I would be interested in a clarification of this point. I'm not going to necessarily take the opposite stance, but that sure is a bold statement, with no evidence given.

Just today, Morningstar posted their "Eight Contenders for International-Stock Manager of the Year". In this article, 5 of the 8 funds are load funds. Also today, Morningstar posted their "Initial Nominees for 2007 Fixed-Income Manager of the Year". Again, 5 of the 8 funds are load funds. Now I'm not saying this is definitive evidence that load funds management is better, but I'd wager that this is not the first year Morningstar's nominees have looked like that. What are their analysts missing?

Take a look at Money magazine, the rag that it is. Even thought they do nothing but spew venom at brokers and load fund families, they have no real choice when it comes to reporting hard numbers. Each month, in the back, when they list top performers, the list is littered with load funds.

Go to Yahoo! Finance, and take a look at their list of top performing mutual funds. They list 3 month, 1, 3, and 5 year figures. What do you see? A whole lot of load funds.

What do we see very little of? Vanguard, T. Rowe, and Fidelity. There's nothing wrong with those families, however, it's an example of the notion that lower costs hardly equates to better management or performance.

"All else equal, no load mutual funds should outperform load mutual funds due to the sales charges and the generally higher total expenses."

Well, that sure is brilliant. All things being equal, sure a no load will come out on top. However, it seems pretty evident to anyone who bothers to do a little research, that all things are not really equal.

I would have to extend Sadale's observation to Kiplinger's top fund listings each month as well. There are also littered with load funds, with very little from Vanguard, et al. Actually, on a no load note, Fidelity has perhaps the most funds listed and they carry relatively higher annual expense ratios. Interesting.

Your implication that no load funds have higher expenses is simply not supported by the data. Of course load funds have higher expenses, mostly due to their high 12b-1 fees.

MW

I would have to extend Sadale's observation to Kiplinger's top fund listings each month as well. There are also littered with load funds, with very little from Vanguard, et al. Actually, on a no load note, Fidelity has perhaps the most funds listed and they carry relatively higher annual expense ratios. Interesting.

Your implication that no load funds have higher expenses is simply not supported by the data. Of course load funds have higher expenses, mostly due to their high 12b-1 fees.

MW

"my experience has been that no load mutual fund families have better investment research talent than load mutual fund families"

I would be interested in a clarification of this point. I'm not going to necessarily take the opposite stance, but that sure is a bold statement, with no evidence given.

Just today, Morningstar posted their "Eight Contenders for International-Stock Manager of the Year". In this article, 5 of the 8 funds are load funds. Also today, Morningstar posted their "Initial Nominees for 2007 Fixed-Income Manager of the Year". Again, 5 of the 8 funds are load funds. Now I'm not saying this is definitive evidence that load funds management is better, but I'd wager that this is not the first year Morningstar's nominees have looked like that. What are their analysts missing?

Take a look at Money magazine, the rag that it is. Even thought they do nothing but spew venom at brokers and load fund families, they have no real choice when it comes to reporting hard numbers. Each month, in the back, when they list top performers, the list is littered with load funds.

Go to Yahoo! Finance, and take a look at their list of top performing mutual funds. They list 3 month, 1, 3, and 5 year figures. What do you see? A whole lot of load funds.

What do we see very little of? Vanguard, T. Rowe, and Fidelity. There's nothing wrong with those families, however, it's an example of the notion that lower costs hardly equates to better management or performance.

"All else equal, no load mutual funds should outperform load mutual funds due to the sales charges and the generally higher total expenses."

Well, that sure is brilliant. All things being equal, sure a no load will come out on top. However, it seems pretty evident to anyone who bothers to do a little research, that all things are not really equal.


That has been my experience after working in the mutual fund industry for many years.

shame on you michael! most of your post is simply poppy-cock.

lets take it real slow. please prove your following statement:



we will work on the other stuff later, but like eating an elephant, lets do it one bite at a time.

It is not logical to conclude otherwise (especially load adjusted returns)

You guys have me all wrong. I am not bashing load funds. I agree that they have a place for those who prefer financial advsiors and are willing to pay for the service.

MW

Actually, what I wrote about Fidelity was in relation to other no load funds such as T. Rowe and Vanguard, yet they consistently outperform those families on a regular basis in the respective categories. In other words, they are beating the spread. I like 'em all.

Michael, please share with us your knowledge of the MF industry since you've worked in it for many years. No really, I am always ready to learn and am serious and not being sarcastic. 1MO and Sadale ask for an explanation and you just say it's your experience. I would like a reference or a short paragraph with possible examples. I have all load funds and would very much like to know now that I need to switch since I still have the time to change.
thanks

Michael, please share with us your knowledge of the MF industry since you've worked in it for many years. No really, I am always ready to learn and am serious and not being sarcastic. 1MO and Sadale ask for an explanation and you just say it's your experience. I would like a reference or a short paragraph with possible examples. I have all load funds and would very much like to know now that I need to switch since I still have the time to change.
thanks

I am actually quite surprised there are people who think that load funds outperform no load funds on a load adjusted basis. I also do not mean to be sarcastic, but you should go to a database that can show you the performance differential between the two groups. Or just look for load adjusted studies online.

MW

I know all I'm asking for is evidence that your statement

"If you compare the load-adjusted performance of load mutual funds to that of no load mutual funds, I am sure you will find the performance of no load mutual funds to be superior"

is true. Now, again, I'm not saying the opposite is true. Nobody here actually said "load funds ouitperform no loads on a load adjusted basis". You claimed that was said. I am simply of the understanding that there are leaders on both sides of the aisle, and that it's up to the investor to find them, either on their own, or with the help of a broker or advisor. However, your statement leaves no room for that possibility. I'd like to know where the evidence is. No studies. Studies aren't evidence. That's been discussed here before on several occasions. The way I see it, if I find one load fund that beats a no load, your statement is false. I'd simply like to know how you've come to your conclusion.

michael, you sound more like a salesman than an analyst:

i FEEL
i FELT
i FOUND

ok, back it up. show me. listen, i KNOW i am right here and i KNOW you are wrong. but, though i am arrogant i am not stupid. if you can in fact prove to me that the earth is flat not only am i willing to listen but i am willing to change my mind. the "proof" you are "offering" so far is quite sophomoric:

It is not logical to conclude otherwise (especially load adjusted returns)"If you compare the load-adjusted performance of load mutual funds to that of no load mutual funds, I am sure you will find the performance of no load mutual funds to be superior"first you say, Of course, you can find or create a study to show almost any desired result. I think you have to look at the basics...then you say, Or just look for load adjusted studies online.Your implication that no load funds have higher expenses is simply not supported by the data.michael, you are L O N G on opinion and short with facts to back it up. i would not be surprised to hear these comments from a layperson but it shocks me to hear this from someone who claims to be a CFA.

i can run these comparrisons ALL DAY LONG at the NASD website. i can run illustrations on Principia (or almost a dozen other analytical tools). i have in fact run exactly the scenarios you are encouraging and i find EXACTLY THE OPPOSITE of your comments to be true. please prove your points. please.

michael, your dancing around my question. Please, I beg you to give me a concrete answer on your view. Again, this is not to disagree but rather to seek knowledge but at this point I will have to say I am starting to wonder if you have knowledge or just a very strong opinion in this matter. I've run the tool on the NASD website and I didn't get the results that no-loads outperform loads at all and actually that tool was the reason I bought loads at that time.

by the way (sadale):Nobody here actually said "load funds ouitperform no loads on a load adjusted basis".

i, me, myself am in fact saying that: in virtually EVERY SINGLE CASE, given the choice between a loaded share of one fund or a no-load share of another fund that the loaded share will OUTPERFORM the no load on a LOAD ADJUSTED BASIS.

i appreciate you pointing out that i didnt say that. i wanted to be just as clear that i am NOW saying it and that i stand behind it 100%. my only caveat is that we are holding the investment for long term investing (greater than 8 years (fewer years works, but i am hedging my bets in my otherwise unequivocable statement).

1MO, I understand your point.

All I'm saying, and I'm sure you'll agree, is there are some fantastic load funds out there. I am also saying there are some fantastic low cost no loads. That said, I just don't find it as easy as the CFA does to make blanket statements about something that, year over year, is impossibile to predict, i.e. mutual fund performance. As you indicated, that sure is suprising from a CFA.

michael, you sound more like a salesman than an analyst:

i FEEL
i FELT
i FOUND

ok, back it up. show me. listen, i KNOW i am right here and i KNOW you are wrong. but, though i am arrogant i am not stupid. if you can in fact prove to me that the earth is flat not only am i willing to listen but i am willing to change my mind. the "proof" you are "offering" so far is quite sophomoric:

first you say, then you say, michael, you are L O N G on opinion and short with facts to back it up. i would not be surprised to hear these comments from a layperson but it shocks me to hear this from someone who claims to be a CFA.

i can run these comparrisons ALL DAY LONG at the NASD website. i can run illustrations on Principia (or almost a dozen other analytical tools). i have in fact run exactly the scenarios you are encouraging and i find EXACTLY THE OPPOSITE of your comments to be true. please prove your points. please.


You have insulted me on more than one occasion and now you want me to give you better answers/information? If you think that load funds are superior to no load funds, then stay the course.

MW

michael, your dancing around my question. Please, I beg you to give me a concrete answer on your view. Again, this is not to disagree but rather to seek knowledge but at this point I will have to say I am starting to wonder if you have knowledge or just a very strong opinion in this matter. I've run the tool on the NASD website and I didn't get the results that no-loads outperform loads at all and actually that tool was the reason I bought loads at that time.

Please do not take this personally, but since you have rejected the idea of using an objective study and I admit that studies can be biased, I do not have much further to say on this issue. I think that are views are too far apart to make this a productive exercise.

My last comment will be regarding 12b-1 fees. You really need not look any further than fees on load funds. Sure Class A shares can have low fees, but when you look at all the load share classes in the aggregate, load funds have higher fees without including the sales charges. Just take a look at 12b-1 fees, which can be as high as 1 percent.

I think regardless of studies, theories, word of mouth or rules of thumb, one must concede that when there is a published listing by third parties of top performing funds over various periods, there will always be an equitable mix of no load and load funds. So, reality dictates that there are viable choices regardless of cost structure.

It should also be noted that it is incredibly easy to weed out the true dogs in either category based on expense ratios. With that said, it is easy to identify cost effective funds in either category as well.

Yeah, but fees were only part of your argument. What about the other part - performance? Nobody's really arguing with the idea that due to 12b-1s, many load funds are more expensive than no loads - though this is certainly not always the case.

You claimed that "my experience has been that no load mutual fund families have better investment research talent than load mutual fund families. A stronger research staff should result in better returns." We've asked for you to enlighten us more specifically, yet you have dodged the request in favor of blanket statements. I'd just like to know, how does whether a fund family charging a load or not have anything to do with its research and management competency?

Fidelity has the Advisor classes of its no load funds; is the management staff stronger somehow on the no load side of the same fund? Some managers or management teams at no load shops sub-advise funds of load shops. Is their competency somehow shown to be weaker with the load fund? The two issues, loads and management strength, are not related.