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Finance Glossary

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No-Load Fund


On a mutual fund, index fund, or other fund, loads are the commissions you pay to the people who manage and sell you your fund. So, no-load fund suggests free stuff, right? No commissions?

Not so fast.

It's really just a marketing phrase that's supposed to make you think you're getting a free lunch. In reality, you still end up paying money for your fund—it's just sneakily hidden as a yearly management fee. Instead of paying a 2–5% commission up front and then having an investment management company manage the money for 0.8% a year in management fees, no load funds charge 0% commission up front, but then investors pay 2% per year in management fees.

Over time, it can end up costing more than the funds that charge you up front.