Zero-Load

Zero-load refers to mutual funds or investment products that do not charge any sales commissions or fees when investors buy or sell shares. In a zero-load fund, all of the investor’s capital is put to work without any portion being deducted for sales charges, which makes it more cost-effective for long-term investors. Zero-load funds typically generate revenue through other fees, such as management fees or expense ratios, but do not impose upfront or back-end sales loads.

Example

An investor purchases shares in a zero-load mutual fund, meaning they will not have to pay any sales commission, allowing more of their investment to grow over time.

Key points

• Investment funds that do not charge sales commissions when buying or selling shares.

• All of the investor’s capital is invested without deductions for sales loads.

• Commonly favored by long-term investors due to the cost savings.

Quick Answers to Curious Questions

What is the benefit of investing in a zero-load mutual fund?

Zero-load funds allow investors to avoid sales commissions, ensuring that all of their capital is invested and has the potential to grow over time.

How do zero-load funds generate revenue if they don’t charge sales commissions?

They typically charge other fees, such as management fees or expense ratios, to cover operational costs and generate revenue.

How do zero-load funds differ from load funds?

Load funds charge sales commissions either upfront (front-end load) or when shares are sold (back-end load), while zero-load funds do not impose these sales charges.