What's a Mutual Fund?

A mutual fund is a professionally managed investment vehicle that pools investor money for the purpose of purchasing securities like stocks, bonds, and even other mutual funds. Investors in mutual funds pay the expenses involved in maintaining the fund (e.g., management, administration, and distribution of the fund).

Can I trade mutual funds at Kapitall?

You can trade certain mutual funds at Kapitall by calling a representative at 1-888-9-KAPITALL (1-888-952-7482).

What fees are involved in trading mutual funds?

There are three kinds of fees when trading mutual funds:

  • Front-end load (aka sales charge) is the commission paid to the broker by a mutual fund when shares of the fund are purchased. It's expressed as a percentage of the total amount invested. Many funds offer front-end loads that decrease when the purchasing amount increases (called breakpoints).
  • Back-end load is paid when the shares of the fund is redeemed (sold). Some funds have back-end loads that decrease the longer the fund is held. Back-end loads are paid by the shareholder and are deducted from the redemption proceeds.
  • 12b-1 fees are charged by some funds annually to compensate the distributor of the fund for ongoing services to the shareholders. 12b-1 fees are paid by the fund itself (and reduces the funds net asset value).

Some funds are classified as no-load funds and do not charge front-end or back-end loads. In addition, their 12b-1 fees are capped at 0.25% of fund assets.

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