Mutual funds are fast becoming the most preferred investment portfolio for many prospective investors. Before opting to invest in a fund, it is always better to know about different companies selling them and the fee they charge for their services.
Insurance companies: Insurance companies should be the least considered option while buying a mutual fund. In most cases, insurance companies never sell this type of fund directly. They often combine the benefits of a mutual fund along with certain other products. These combinations are offered to customers in the form of unit-linked products. Another disadvantage of buying such products from an insurance company is the sales load that these funds carry. A sales load can be defined as the fund commission paid to brokers. This can range from 4 to 8 percent.
Banks: Another unfavorable place for buying fund is a bank. Disadvantages of buying a fund from a bank are the same as they are with insurance companies. Even banks prefer to sell the funds in the form of loaded funds. Investors either need to bear the entry load or the exit load. Another disadvantage is that banks do not offer much variety keeping in consideration the investment objectives of the investor. Also, in most banks, there are no capable financial advisors providing much information about the funds and their advantages to customers.
Stock brokers and investment advisors: One should approach these groups with caution. Some of these people tend to sell the funds loaded with heavy entry or exit costs. Even if an investment advisor offers a no-load fund, he charges heavy fees for his financial service.
Discount stock brokers: These people are one good source of buying these types of funds. This is because, these brokers are registered with different mutual fund companies and offer a wide variety of fund options to investors without any load. Discounted stock brokers are primarily preferred more than mutual fund companies due to their value of expertise in this sector and also the advice they offer to customers are usually based on their investment needs.
Mutual fund companies: These should be the most preferred source of buying a fund. These companies do not charge any transaction charges to customers who approach them directly.