A true no-load fund is defined as any fund with the following characteristics:
Front Load equal to zero
Deferred Load equal to zero
12b-1 Fee less than or equal to 0.25.
Management fees, however, may be higher, since marketing charges come directly out-of-pocket. True no-load funds are normally, but not always, cheaper to own than load funds with distribution fees.
For the Pros
While true no-load funds may be attractive from an expense standpoint, this does not suggest that funds with loads should be shunned. Many funds with consistently above-average track-records have fees and expenses attached. In many cases these may be marketing fees (often 12b-1 fees) or charges to cover administrative costs, rather than broker commissions. Clearly, investors fare best by reading a fund’s prospectus carefully, and weighing the factor of fees and expenses into any fund-investing decision.