subject: High Growth Index Funds With No Load [print this page] Although increases in stock market value do not correlate with increases in GDP, it is the case that large magnitude drops in stock market value portend recessions and decreases in GDP. In any case, investors generally pull out of index and total stock market funds as yields on these investments fall dramatically. These investors are seeking replacement financial products with no load that can duplicate the rise of stocks during good years. A high yield mutual fund of comparable risk is not always available but let us consider some possibilities.
One of the first places to consider finding alternative investments is the high yield mutual funds available at a discount or no load brokerage firm. Such firms have very low fees as they do not pay managers for performance unlike loaded funds. Instead the manager sticks to a predefined game plan by balancing the funds according to some index formula. The manager makes less but has a much more stable job. Likewise, a loaded fund is actively managed and incurs high costs.
The second place to look is a brokerage that offers exchange traded funds (ETFs). These are slightly different in structure but a few differences. One of them is that ETFs can be traded all day just like a stock on the exchange. They are also baskets of stocks that are indexed in some way, representing no load index funds. Furthermore, there are usually no minimums to buy ETFs unlike no load index mutual funds that sometimes have minimums in the tens of thousands of dollars.
Some other choices exist for wise investors trying to diversify their portfolio beyond high yield mutual funds.
High yielding money market accounts might be located at large banking institutions and other institutions like brokerages. They are expected to be government insured. One should be aware that a money market account is not to be confused with a money market fund. The former is the product | of one bank and guarantees an interest rate. The latter is a fund that is a portfolio of several money market instruments and does not adhere to a single interest rate, rather appreciating at varying returns over time.
A less appreciated gem in the financial world is the GNMA mutual fund, frequently eclipsed by the related companies Fannie Mae and Freddie Mac. All three manage real estate loans but Ginnie Mae funds are thought to be the most conservative. In the time of the home loan meltdown of 2007-2008, when Fannie Mae and Freddie Mac were lambasted due to their part in taking on the risks of underqualified home buyers, Ginnie Mae emerged largely undamaged because of extremely low-risk investments. Not all mutual funds can title itself a Ginnie Mae fund. Only those that have more than 80% share of assets in GNMA securities are allowed.
If the government conducts its activities it needs to in some way finance the operations enough taxes are collected to reward employees. Temporarily obtaining money at these amounts is carried out with the help of the sale of bonds, which are basically IOUs by the government to pay back plus interest. The general masses buy into bonds for hitherto has been a highly ironclad promise of repayment and lack of default risk. No load index funds with bonds as the primary asset are available too.
