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Professor Alan Palmiter tells Bloomberg the average broker may be preparing for a world without load funds

Imagine an investment that is guaranteed — at least initially — to lose you money. Such an investment was once quite common and still exists: the front-loaded mutual fund.

To buy into such funds, investors pay as much as 5.75 percent of their initial investment in a load charge. That $40,000 you wanted to invest? It instantly shrinks by $2,300.

Plenty of investors still pay loads. According to fund research firm Strategic Insight, 5 percent of mutual fund shares were bought with a load of 4 percent or more in 2010. Mutual funds charge the fee, but almost all of its proceeds are sent to the broker or adviser recommending the fund. However, the percentage of funds sold with front-end loads is dropping rapidly, and excessive loads could disappear almost entirely under new regulations.

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