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Funds 105: How to Purchase a Mutual Fund

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1.
No-transaction fee networks charge _______.
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Fund companies for being part of the network. There are no up-front costs with a no-transaction fee network. The networks charge funds for being included, and funds very often pass along these charges to all shareholders (whether or not they invest via a supermarket) in their expense ratios.
2.
With no-transaction fee networks, a mutual fund investor pays for the service _______.
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Indirectly. Since these networks charge mutual funds to participate in them, the funds pass their cost along to investors through the expense ratio.
3.
If you use an advisor to buy mutual fund shares for you, he or she will be paid a commission by investing your money in _______.
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Load funds. Load funds come with a sales charge that compensates the advisor for his or her work.
4.
Buying several mutual funds from one fund family limits your paperwork (account statements, tax statements, etc.)
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True. There is more consolidation of paperwork when you stick with one fund family.
5.
A justification that some do-it-yourself mutual fund investors use for buying no-load funds is that _______.
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Since they are not getting investment advice in return, why pay a commission? For this reason, many prefer no-load funds.