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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
Home / Markets / Industries / Energy
Thursday, May 15, 2008
Oil Ends Volatile Session Slightly Lower
Associated Press
![Oil Dollar [276] 2](/images/General/oil_dollar.jpg)
Oil futures ended a whipsaw session slightly lower Thursday as the expiration of options played havoc with prices, driving crude near record high levels at times and down by more than $3 a barrel at others. Retail gas prices, meanwhile, advanced past $3.77 a gallon.
Options let investors bet oil prices will rise or fall in the future. Oil prices can fluctuate widely on days when options expire, analysts said. The effect may be exacerbated at the moment, when prices at historic levels have drawn more investors to speculate in options, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
"It's options expiration madness is what it is," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Contributing to the volatility, the June crude oil contract expires next week. Oil prices sometimes trade erratically as investors square positions ahead of a contract expiration.
Meanwhile, natural gas prices tumbled Thursday after the Energy Department said natural gas inventories rose by 93 billion cubic feet last week, more than analysts had expected. That helped pull oil prices down from earlier highs, analysts said.
Light, sweet crude for June delivery fell 10 cents to settle at $124.12 a barrel on the New York Mercantile Exchange after rising as high as $126.64 earlier in the session, and falling as low as $120.75 later in the day. Oil prices reached a trading record of $126.98 a barrel on Tuesday.
June natural gas futures fell 19.9 cents to settle at $11.399 per 1,000 cubic feet on the Nymex.
The dollar also reversed course Thursday, gaining strength against the euro and prompting selling by investors who had earlier bought oil as a hedge against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.
At the pump, meanwhile, the national average price of a gallon of regular gas rose 1.8 cents overnight to $3.776, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 67 cents higher than a year ago, and many analysts think they could rise as high as $4 on a national basis in coming weeks. Consumers in many areas are already paying that much, or more.
Diesel fuel prices jumped 3.6 cents Thursday to a new national average of $4.455 a gallon. Diesel is used to fuel most trucks, trains and ships, and is a large part of the reason prices of food and consumer goods are rising so fast.
Mike Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Mass., thinks gas prices will peak around $3.85 to $3.90 a gallon on a national basis just before the Memorial Day weekend.
"I don't think we'll go much higher than that," he said.
Demand for gasoline has been sliding since January, and many analysts think American consumers' declining appetite for fuel will eventually pull prices down. However, that theory could prove wrong if oil's price reversal is temporary.
"If we don't get a break in crude oil prices ... I can't imagine that we're going to see any relief at the pump this summer," said Stephen Schork, an analyst and trader in Villanova, Pa.
In other Nymex trading Thursday, June gasoline futures fell 1.46 cents to settle at $3.1658 a gallon, and June heating oil futures rose 0.46 cent to settle at $3.6224 a gallon.
In London, June Brent crude fell 61 cents to settle at $121.25 a barrel on the ICE Futures exchange.
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