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Rekenthaler Report

Mutual Fund Pricing Is a Mess

"No load" sounds simple--but it is not.

Dream On
Once, fund investors had a dream. They dreamed that one day, mutual funds would no longer be divided into "load" and "no-load" families. No longer would half the industry consist of funds with sales charges, to be purchased through financial advisors, and the other half without such loads, to be purchased directly. No longer would the two groups never meet. (Quite literally--in the early 1990s, Morningstar offered segregated versions of its annual Investment Conference, one for load funds and one for no-load funds.)

That dream has been realized. The long, gradual movement recently reached its conclusion, when the largest load-fund family, American Funds, announced that it would make no-load shares available to direct investors. That's excellent investment news. Morningstar's Alec Lucas tells the story in "(Re)introducing Capital Group's American Funds." The company has several stock funds that have reliably beaten the major indexes, over time, and they now can be bought without paying either a front- or back-end sales charge.