Most experienced investors don't buy full-load mutual funds. Loads can start adding up quickly, and there is no evidence to suggest that load funds perform better than no-load funds. You, as the investor, are paying for the research and "due diligence" of the broker when you pay a load. Once you become more aware and gain expertise, the need for a broker lessens.
Redemption fees are charged whenever you cash all or part of your shares. Unlike loads, redemption fees are usually small and they do disappear after a while. Nevertheless, a wise investor should be aware of whether or not his/her fund charges these fee s and how much they are.
In 1980, the SEC authorized the 12b-1 (distribution) plan. This allows mutual funds to charge 12b-1 fees, which are used in the marketing and distribution expenses that are entailed. This includes costs of marketing, publishing annual reports and prospe ctuses, and to pay brokers themselves. Any 12b-1 fee in excess of 1% is too high. In essence, funds that charge a 12b-1 fee are not truly a "no-load" fund. These types of fees may seem minuscule, but when investing large amounts of funds, they can begi n to add up quickly.
The most serious impediments that an investor may encounter when buying a mutual fund is a high sales charge (8.5%), extremely high volatility, and "back-end" loads, or deferred-sales charges. These types of fees can accumulate rapidly. There are numero us other handicaps which will undoubtedly effect fund performance, but none would be as serious as the aforementioned ones. These are things that any investor must look for before purchasing mutual funds.