Syndicate
Open Investments Funds
The open investment funds can be subdivided attending to the types of selling commissions and fees that are attached to them. Nobody gives anything for free, for which somebody has to pay the fees of the funds management, office supplies, sales and publicity expenses, etc.
Most of the expenses for the operation are already included in the management fees, but there are some items; as are the sale expenses and the amortization or anticipated rescue expenses: that have the mature of additional deductions and that, at a shrinkage of the real profitability of your investment, have to be valuated carefully before deciding to buy a fund in concrete.
In what it concerns to sales, the funds are subdivided in “with burden” “without burden” and “with deferred burden”. The funds with burden have variable sale expenses over the initial amount of the investment that vary from a 3% to a 8.5%, being this last the maximum authorized by the law. In general, the funds without burden are sold directly by the group of salesmen from the issuing entity without any kind of debit from the sale, if well most of these funds have expenses due to amortizations or of anticipated rescues. The funds with deferred burden have amortization or anticipated rescues expenses that go from a 4.5% to a 7% and that are reduced in 1% for each year that you keep the participations, so that after six years they generally disappear from these expenses.
Never has it been so updated that phrase that Mark Twain made about the statistics as when you try to compare the profitability that most of the mutual investment funds boast about; however, the most trustworthy data indicates than in the case of long term investors (that is, that which conserves the participations during more than five years), there is really no difference what so ever in the profitability between funds with burden and funds without Burden Morningstar Inc., company dedicated to follow the returns of the mutual investment funds, says that there are approximately 4,250 fund without burden, about 2,930 of frontal burden and the rest,, some 3,230, are funds with deferred burden.
Most of these funds also support an extra overload because of the amortizations or anticipated rescues, called 12-b-1, that constitute another continuous way of compensating the brokerage agencies for them to keep on being interested in promoting the funds.
The funds without burden are permitted to charge up to 0.25% per year; part of this sum serves as retribution to the agencies for selling the funds. The funds with deferred burden, which uses the 12-B-1 overload to recuperate the commissions they pay to the security agencies for selling the funds, can charge up too 1% per year.