Best Mutual Funds Explained
All you need to know about mutual funds, including the risks, rewards and terms  

Best Performing Mutual Funds

best mutual fundsThe first group of fees I would like to consider is called shareholders fees, which covers a multitude of sins when looking for the best mutual funds for our investments. In general, fees and expenses can be broken down into two distinct groups - namely those fees associated with the buying selling or transfer of shares which I have called shareholder fees, and those associated with managing and operating the fund which I call operating expenses.

So let's start by looking at shareholder fees, and this term called "load" which appears all the time!

Best Performing Mutual Funds - Load

I have no idea why it is called load, but assume it just used to confuse us poor mortal souls who are merely trying to invest some of our hard earned cash in the best possible place! In simple terms all load means is commission! So wherever you see the term in future, just insert the word commission.

Now you will come across several ways that the term is used and the four key ones are as follows - front end load, back end load, no load, and level or low load. So a front end load fund will charge sales commission up front as the shares are purchased in the fund, the back end load fund will charge you commission when you sell your shares, and the no load fund will charge ( yes you've guessed it ) no commission!! Finally the level or low load  fund applies commission when you sell, not when you buy, but these charges are dependent on the time the shares are held. So if you sell within a given timeframe then the charges may apply. In general all load or commission fees go to the broker that buys and sell the shares. Now one of the questions you might ask is, surely a no load fund provides the best option for my mutual funds investing - possibly, but you need to be aware of the following costs.

Best Performing Mutual Funds - Purchase Fee

As with many things in life, what may appear a simple decision at first glance, is not so straightforward once you start to read the small print. Such is the case with no load funds  - the costs are built in elsewhere, and with some other funds as well, so please always check first as these charges may apply even if the fund is one of the other three types. The first cost is referred to as a purchase fee, and is charged when you buy your shares. The reason it is not considered commission, and therefore part of the load, is that this is charged by the fund itself and is used to offset some of the costs associated with the purchase.

Best Performing Mutual Funds - Redemption Fee

As with the purchase fee, this is a charge which is levied by the fund and is applied when you sell your shares. Again this is not considered to be part of the load since the fees go to the fund direct and not a broker. The maximum fee that can be charged by law is 2% under current SEC rules.

Best Performing Mutual Funds - Exchange Fee

This is a fee that some mutual funds charge if you wish to exchange your shares for another fund in the same group. This may or may not be important, but it's worth considering as it is yet another cost that you need to consider when selecting the best mutual funds available.

Best Performing Mutual Funds - Account Fee

Finally some mutual funds may charge an account fee. Generally this occurs where your account falls below a certain minimum level, in which case the fund can charge you for managing the account. Again this may or may not be relevant for you, but it is worth being aware of all the possible fees before you choose your mutual fund.

As I said earlier, there are lots of charges and fees - the above are those I've grouped as shareholder fees. Now let's look at operating expenses, and the fees you may be charged here. Who said choosing the best mutual funds was easy!

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