More and more investors are being sold 'load' funds 'No-loads' lose some market share

August 11, 1996|By BLOOMBERG BUSINESS NEWS

BOSTON -- With 7,000 mutual funds out there and more arriving each week, picking just the right one is becoming as bewildering for the little investor as picking the right stock.

As a result, an increasing number of individuals are turning to brokers and financial planners to tell them which funds to buy.

The Investment Company Institute, the mutual fund trade group, estimated that 44.6 percent of new fund purchases in the first half of 1996 were made through brokers and advisers who were paid commissions of as much as 5.75 percent. That was up from 41 percent in the first half of 1995.

In contrast, sales of "no-load" funds in the first six months of 1996 declined to 41 percent of total sales from 43.5 percent in the first half of 1995, ICI said.

If the numbers continue this way, it could mark the end of a four-year trend where load funds, those sold with a commission, have lost market share to no-load funds, which are sold without a sales charge.

"Increasingly, fund sales involve some sort of intermediary, either a broker or a fee-based financial planner," said Neil Bathon, president of Financial Research Corp., which tracks the $3.1 trillion fund business.

"The momentum is building because people are increasingly daunted by the idea of planning for their retirement or their children's education without getting some professional help," Bathon said.

The remaining 14.4 percent of fund buying in the first half of 1996 was of variable annuities, which also carry sales charges.

Pub Date: 8/11/96

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