The Best No Load Mutual Funds and ETFs

How to Select the Top No Load Mutual Funds and ETFs

Given the extremely large number and variety of stock – equity, bond – fixed income, and equity mutual funds and ETFs, investors need a rational basis to select among them. For example, there are over 60,000 different mutual fund investment share classes sold worldwide. Some mutual funds and ETFs must be better than others, but which ones are they? How can you tell before the fact?

Without scientific selection criteria and a good understanding of which factors are more or less likely to increase your long-term risk-adjusted investment returns, you will make erroneous decisions based on false assumptions. The most obvious mistake that individuals make is to extrapolate past performance into the future. Superior past performance has simply not been shown to be a reliable predictor of superior future performance.

Low Costs Lead You to the Best No Load Fund

Financial industry sales people and investment advisors promote high cost mutual funds with superior past performance, because they are easier to sell to naive investors. Furthermore, most investment advisors and financial sales people themselves do not know any better. The financial services companies that they work for do not teach them about the findings of the investment research literature.

Instead, they teach their “financial advisors” how to sell investment products quickly — whether or not these investments really are the and ETFs from the point-of-view of their clients. The cycle of performance chasing goes on endlessly. In the process, it damages the long-term financial success of millions upon millions of individual investors around the world.

Mutual fund sales loads and 12b-1 marketing fees reduce your long-term investment performance. These investment sales commissions dramatically reduce the size of your long-term investment portfolio. The true costs of mutual fund sales loads and mutual fund 12b1 fees are far larger that most investors understand. Furthermore, financial advisors and commissioned securities sales people almost always promote mutual funds and ETFs that are more expensive. You pay more to buy these funds and you pay more in the long run, because mutual funds with sales loads and 12b1 fees are more likely to come up short in comparison with low cost no load .

Buy Low Cost No Load Mutual Funds and Hold Them for Years

Investors want to select the best bond and equity mutual funds and ETFs to hold for a long duration. Most would also like to invest additional amounts automatically into these funds over time without worrying about whether they do or do not own the available. Most individual investors do not want to spend their precious personal time constantly figuring out which other mutual funds to switch to. (Note that a minority of investors very actively and repeatedly switch between mutual funds. Dalbar’s studies have show that the long-term performance of frequent switchers is simply terrible, when compared to long-term buy-and-hold investors.)

Also, buy-and-hold mutual fund and ETF investors usually are much less concerned about short-term fluctuations than they are about achieving their longer-term investment capital appreciation goals. Such investors want to use mutual screening or selection criteria to identify the and to minimize the need for frequent changes due to inferior mutual fund performance. Individual investors are better served, if they understand what the scientific investment literature says about potential selection criteria. Therefore, a series of articles the Pasadena Financial Planner discusses fund selection criteria that have a firm basis in scientific investing. Click on the Sitemap link to find them.

Top 10 S&P 500 Index Funds: ,

No Load Mutual Funds