Do loads & 12b-1 fees optimize fund performance?

No. They detract from fund performance.

No, but they keep the fund managers and salespeople fat and happy.

No, fees dont optimize performance.

Loads and fees mathematically do not enhance performance. But the advisor involved in your account enhances your chances of success a hundred fold. If you purchase a fund without fees and loads you do not get an advisor. Instead you are at the mercy of the folks who answer your questions here who may know less than you do. Remember when it is all said and done its not the performance of the fund that matters but the performance of the investor.(You). Pay the extra fee which is usually .25% and hire a qualified advisor. Your heirs will thank you.

No, they hinder performance. However, there are funds that may be worth the extra performance needed to overcome that and still provide a good return.

I seldom pay a load and never more than 3%. Some are over 7% loads. I call them "boat anchors".

I鈥檓 not a license advisor (so, nothing to sell to you), but I have been investing in the markets for decades. As everyone pointed out here loads and 12b-1 fees do not enhance performance. They do, in many cases, get you an advisor who sells these products to you, (unless you purchase the funds not from an advisor).

If you know what you are doing (or are willing to learn), and do it yourself, there is a case to be made that you try to avoid paying these fees as they do not predict better performance. In fact studies have shown that they hinder performance if anything, which is logical. Over the course of your life time you can save a bunch of money, if you do it by yourself.

However, not everyone is able to do this by themselves. Some do need the help of others. If you think you need hand holding, a GOOD advisor can be very help. Academic studies have also shown that some people are not very good with investing. One reason is that they don鈥檛 stick with their original investment and jump from investment to investment or not stick to your goals. A good advisor can help you stick to your goals. In any case, if you want to go with an advisor, you should do you own diligence; you want to find an advisor who has your best interest in mind when helping you to invest and not just sell you something that pay him the most fee. You want to know the fee and load of securities that are sold to you and make sure that they are reasonable.

Hello,

Loads and 12b-1 one fees are costs and therefore do not optimize performance. It is important to note that 12b-1 fees are incorporated into a mutual fund's total expense ratio. A fund could have a 12b-1 fee , but still have a lower total expense ratio than a fund with a 12b-1 fee. !2b-1 one fees can be as high as 1.00%. Load funds normally have 12b-1 fees and some no load also have 12b-1 fees.

A fund that does not have a sales charge is allowed to have a 12b-1 less than or equal to 0.25% and still call itself no load.

Michael A. Weiss, CFA
The Editor
The Mutual Fund Investor
http://www.mutualfundinvestor.net