You are considering investing in one of several mutual funds. All the funds under consideration have various combinations of front-end and back-end loads and/or 12b-1 fees. The longer you plan on remaining in the fund you choose, the more likely you will prefer a fund with a ________ rather than a ________, everything else equal.

Question

Quizplus · Accepted Answer

If you plan on remaining in the fund for a longer period, you are less likely to sell your shares in the near future, which means you won't need to pay a back-end load. Choosing a fund with a front-end load would therefore be preferable since you will pay the fee once and then hold onto the shares. A 12b-1 fee would be an ongoing expense, and it is generally better to avoid ongoing expenses if possible.

You Are Considering Investing in One of Several Mutual Funds