Mutual Fund Companies: Why go from No Load to Load?

The recent Morningstar story, that American Century is planning to shake up its funds and increase their load fund lineup from 26 to 39, has been bugging me all weekend.

I simply don’t get it. Well known funds like TWEIX, BEQGX and TWCUX, among others, are set to transition from the no load share classes to the load lineup.

The reason given was that they would be primarily targeted towards fee-based advisors and retirement plans. Well, there is silent revolution going on among many advisors trying to find a way to go from commission based to fee-only.


Primarily, to escape the stigma that commission based advisors are only looking out for themselves and not for their clients. That would mean the use of no load products and ETFs. Of course, this transition may take years and, in the meantime, load funds will continue being sold to those investors who don’t know any better.

Back to American Century. Could it be that their funds lack performance and the company is looking for another way to market them? Maybe, but a quick check of my StatSheet, which features the American Fund family as well, shows that the performance of their funds, at least for the current Buy cycle, is in line with others.

If you have any thoughts as to why in today’s investment climate, with low cost ETFs taking the lunch bags from some mutual funds, a fund company would go the load route, please share them with me.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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