How to invest in mutual funds with zero sales load

Updated by

In investing in investment funds like mutual funds, you would want the cost of investing as low as possible. This is done by selecting a fund with the least cost. The higher the mutual fund fees, the lesser your potential earnings becomes.

And one of the fees that you can actually avoid is the sales load. Sales load is charged by the fund every time that you invest regardless if it’s your first time or additional investment. Many of the companies charge fees ranging from 1% to as high as 5%.

But do you know that there are actually ways for you to avoid paying the sales load? Read on and find out more.

Sales load and mutual funds

Most of the mutual funds being offered in the Philippines have sales load. Only very few don’t have them. That’s why it is really important to carefully select the investment to go with. There are two different kinds of sales load.

  • Front-end
  • Back-end

The front-end fee charges you every time that you put up capital whether at the time of opening the account or additional savings. The back-end fee, as the name suggests, would not charge you when you put in money to your fund, but it would be collected when you redeem your shares and get your money back.

And so be careful when you see a fund that has no front-end fee or sales load. It might turn out that they charge it when you withdraw your money. How can you check? Read up on the prospectus of the fund. You can also visit the website or drop by their office to ask for information. Below you’ll see the different investment funds offered by mutual fund companies:

NameTypeSales load
ATRAM Dynamic Allocation Fund, Inc.Balanced5%
ATRAM Philippine Balanced Fund, Inc.Balanced5%
Bahay Pari Solidaritas Fund, Inc.Balanced1.50%
Cocolife Dollar Fund Builder, Inc.Balanced0.50%
First Metro Save and Learn Balanced Fund Inc.Balanced2.00%
Grepalife Balanced Fund CorporationBalanced2.00%
NCM Mutual Fund of the Phils., Inc.Balanced3.36%
PAMI Asia Balanced Fund, Inc.Balanced3.36%
PAMI Horizon Fund, Inc.Balanced2.80%
Philam Fund, Inc.Balanced3%
Sun Life of Canada Prosperity Balanced Fund, Inc.Balanced2.00%
Sun Life Prosperity Achiever Fund 2028, Inc.BalancedNone
Sun Life Prosperity Achiever Fund 2038, Inc.BalancedNone
Sun Life Prosperity Achiever Fund 2048, Inc.BalancedNone
Sun Life Prosperity Dollar Advantage Fund, Inc.Balanced2%
Sun Life Prosperity Dollar Wellspring Fund, Inc.Balanced2%
Sun Life Prosperity Dynamic Fund, Inc.Balanced2%
ALFM Dollar Bond Fund, Inc.Bond5%
ALFM Euro Bond Fund, Inc.Bond5%
ALFM Peso Bond Fund, Inc.Bond1.25%
ATRAM Corporate Bond Fund, Inc.Bond2.24%
ATRAM Total Return Dollar Bond Fund, Inc.Bond5%
Cocolife Fixed Income Fund, Inc.Bond2%
Ekklesia Mutual Fund Inc.Bond2%
First Metro Save and Learn Dollar Bond Fund, Inc.Bond1%
First Metro Save and Learn Fixed Income Fund,Inc.Bond2%
Grepalife Dollar Bond Fund Corp.Bond2%
Grepalife Fixed Income Fund Corp.Bond2%
PAMI Global Bond Fund, IncBond3%
Philam Bond Fund, Inc.Bond3%
Philam Dollar Bond Fund, Inc.Bond3%
Philequity Dollar Income Fund Inc.Bond1%
Philequity Peso Bond Fund, Inc.Bond1%
Soldivo Bond Fund, Inc.Bond3.36%
Sun Life of Canada Prosperity Bond Fund, Inc.Bond2%
Sun Life Prosperity Dollar Abundance Fund, Inc.Bond2%
Sun Life Prosperity GS Fund, Inc.Bond2%
ALFM Growth Fund, Inc.Equities3.00%
ATRAM Alpha Opportunity Fund, Inc.Equities5.60%
ATRAM AsiaPlus Equity Fund, Inc.Equities2.24%
ATRAM Philippine Equity Opportunity Fund, Inc.Equities5.60%
Climbs Share Capital Equity Investment Fund Corp.Equities2.00%
First Metro Consumer Fund on MSCI Phils. Inc.Equities2.00%
First Metro Save and Learn Equity Fund,Inc.Equities2.00%
MBG Equity Investment Fund, Inc.Equities5%
One Wealthy Nation Fund, Inc.Equities3%
Philam Strategic Growth Fund, Inc.Equities3.00%
Philequity Dividend Yield Fund, Inc.Equities5.00%
Philequity Fund, Inc.Equities5.00%
Soldivo Strategic Growth Fund, Inc.Equities3.36%
Sun Life Prosperity Philippine Equity Fund, Inc.Equities2.00%
Sun Life Prosperity World Voyager Fund, Inc.Equities2.00%
United Fund, Inc.Equities2.00%
PAMI Equity Index Fund, Inc.Index3.36%
Philequity MSCI Philippine Index Fund, Inc.Index5.00%
Philequity PSE Index Fund Inc.Index3.50%
Philippine Stock Index Fund Corp.Index1.50%
Sun Life Prosperity Philippine Stock Index Fund, Inc.Index2.00%
ALFM Money Market Fund, Inc.Money market3%
First Metro Save and Learn Money Market Fund, Inc.Money marketNone
Philam Managed Income Fund, Inc.Money market ? 
Sun Life Prosperity Dollar Starter Fund, Inc.Money marketNone
Sun Life Prosperity Money Market Fund, Inc.Money marketNone

Why do mutual funds charge sales load?

It is unclear how the money collected from sales load is going to be utilized by mutual fund companies.

A possible explanation is that they form part of the compensation for certified investment solicitor (CIS), the representative who sells the funds. The CIS is a person who took licensing exam administered by the Securities and Exchange Commission (SEC) that would allow them to offer mutual funds to the investing public.

You might think that you may just directly go to the company and open an account there so you don’t have to need the services of the CIS and avoid paying the fee. But that’s not almost always the case because accounts are are usually assigned to a CIS.

Effects of mutual fund sales load on long term investing

If you don’t do your own research, you’re going to pay with your money without you even knowing it.

Capital preservation

The first obvious effect is that your capital is diminished. In the case of the front-end fee, a percentage of your money is taken away from the final invested amount.

So for example, if you invested P2,000 in a fund with a 5% front-end fee, then what ends up being invested is only P1,900. And if you forecast saving that amount for three decades in a 5%-, 2%- and 0%-fee, this is how the total invested amount would’ve looked like.

YearSavings5%- fee Invested Amt2%-fee Invested Amt0%-fee Invested Amt
1 24,000 22,80023,52024,000
2 48,000 45,60047,04048,000
3 72,000 68,40070,56072,000
25600,000570,000 588,000600,000

As you can see, in 30-year period, you end up losing money with sales load. If you invest in a zero sales load fund, you know that whatever you put in will end up being invested.

Compound interest

If you’re planning to invest for long term, such as preparing for your child’s education or retirement, then the negative impact can be huge on your potential earnings. This is the result of diminished capital discussed earlier. Sales load lowers the amount that gets invested, and the consequence is that the growth of your money is also less than if you put it in a no-load/zero-load fund.

The table shows the growth of savings in 30 years under different sales load/front-end fees: 5%, 2% and 0%. I did the math in the table below with the following assumptions:

  • Monthly savings of P2,000
  • The fund grows 10% annually.
  • Time horizon is 30 years.
YearSavings5% fee2% fee0% fee
1 24,000 24,074 24,834 25,341
2 48,000 278,047 286,828 292,681
3 72,000 532,021 548,821 560,022
4 96,000 785,994 810,815 827,362
5 120,000 1,039,968 1,072,809 1,094,703
10 240,000 2,309,835 2,382,778 2,431,406
15 360,000 3,579,703 3,692,746 3,768,108
20 480,000 4,849,571 5,002,715 5,104,811
25 600,000 6,119,438 6,312,684 6,441,514
30 720,000 7,389,306 7,622,653 7,778,217

As you can see, the difference can be substantial. Comparing zero-fee versus 5% fee, the difference is P388,911. And when you compare zero-fee versus 2% fee, the difference is P155,564.

Zero-fee is the clear winner. It also allows you to gain the most compared to the other options that have the fee.

Strategies to avoid mutual fund sales load

To avoid paying the sales load, you have four options.

  • Choose a sales load-free fund.
  • Be an IMG member
  • Open a stock broker’s account that offers zero sales load mutual funds.
  • Go for UITF.

1. Choose a zero sales load mutual fund

I have written a separate article on mutual fund companies and comparison of mutual fund fees. You can actually check the tables and choose the one that indicates “None” under Sales Load column.

However, since most funds do charge this fee, you might be left with very few options. You might end up choosing between a fund that does not suit your goal or where you can lessen your cost and that is not good.

2. Be an IMG member

IMG or International Marketing Group is a company that offers free financial education, healthcare plans, and their mutual funds have zero sales load.

The only issue is that for you to enjoy the benefit of zero sales load investing, you have to pay the membership fee.

The membership fee is about P3,000 to P4,500, which can be steep for most Pinoys. Also, that amount can actually already be allocated to start a fund and not just to open a membership.

Additionally, it is also not appropriate for you for you if your only goal is to invest in mutual fund with the least cost. Why? You’re paying and losing money if you end up not maximizing all the advantages that the membership offers.

3. Open a stock broker’s account with zero sales load mutual funds

Good thing that stock brokers allow the public to invest not only in stocks but also in investment funds.

As far as I know, there are two stock brokerage companies that have online platforms that make it possible for you to avoid sales load: First Metro Securities and COL Financial.

When you invest, there is no membership fee. The money that they require you to open the account can be used to invest in the funds right away.

First Metro Securities is an affiliate of Metrobank, and it has the FundsMart platform. You are given 25 funds from 6 leading investment houses in the Philippines. What’s more, the sales load is waived.

First Metro Securities FundsMart

COL Financial has the Fund Source platform where you are given a list of funds that you can choose. What’s good is that you can actually start opening an account for as low P5,000. And you can also save because the you don’t have to pay the sales load.

COL Financial brochure

4. Go for UITF

UITF or unit investment trust fund is similar to mutual funds. While mutual funds are offered by investment companies, you can actually open a UITF through the banks or trust companies. You may read the separate article for a full discussion on the difference between a UITF and mutual. Now, most UITFs don’t have any sales load. You can check this article for comparison of UITF fees.


If your only purpose is to invest in mutual funds with the least cost and nothing else, then investing in UITF or through stock brokers like First Metro Securities or COL Financial can be an alternative for you.