Here Come the Load Funds

I wrote this article for FundInvestor before American Funds turned the trend into a true tectonic shift.

Here come the load funds! More load funds are popping up in No Transaction Fee supermarkets--minus the loads. J.P. Morgan, Hotchkis & Wiley, Calamos, Morgan Stanley, Allianz, Columbia, Oppenheimer, ClearBridge, Western Asset, and Thornburg are all in NTF plans now. They carry the standard minimum investment and are generally load-waived A shares. The lines between load and no-load have been steadily blurring, but recent Department of Labor rule changes have really accelerated the shift. There are a few big exceptions, though. MFS has not joined the NTF trend, but maybe it will dive in now that American has.

In any case, this change opens up a lot more opportunities for no-load investors. Let's take a look at a few of the firms. Be sure to check your NTF platform to see which firms are in. You can also see all of our load-fund Morningstar Medalists on Morningstar.com (select the Load button on the left).

American Funds

American Funds is a huge entry because it has so many low-cost well-run funds. Because American loves share classes, it has a new one for NTFs that is 5 basis points above the A share expense ratio. That still makes most of them quite cheap. Alec Lucas covered the ground on American’s entry to NTF quite well. I’d draw attention in particular to funds like

J.P. Morgan

J.P. Morgan offers a number of straightforward, well-run funds. They are generally designed to be core holdings that work just as you’d expect them to. The firm eschews extremes in risk to go right down the center. We give Morningstar Medalist ratings to equity, bond, foreign-equity, and target-date funds from the firm, including

Franklin Templeton

It looks like some Franklin Templeton funds are in NTFs and some are not.

Oppenheimer

Tread carefully with this firm. It has some strong foreign-equity funds, such as

Hotchkis & Wiley This deep-value firm is better than some of its funds' records look right now. Its equity funds employ a disciplined deep-value approach that can be rewarding but is currently at a low ebb. The brutal decline in natural-resources stocks hurt the firm's deep-value strategies in 2014 and 2015, though they have recovered a bit.

Columbia

Columbia is the aggregation of a number of fund companies. Many of the firms under the Columbia umbrella were acquired in Bank of America’s acquisition spree before the firm was sold to Ameriprise, which then merged it with its own RiverSource group. We give its funds five Neutral ratings and five Medalist ratings--that’s nothing to write home about. But still, there are some good ones, like Silver-rated

Western Asset

This firm is a well-regarded bond specialist. Funds like

Thornburg

These funds aren’t what they once were. Asset bloat and manager defections hurt their records and have led to lower ratings.

Morgan Stanley

The firm sold most of its asset-management business to Invesco but retained Dennis Lynch’s growth team, which earned the Morningstar Domestic-Stock Fund Manager of the Year accolade in 2013. We give the bold