How To Invest In Mutual Funds With Zero Sales Load

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:

ATRAM Alpha Opportunity Fund, Inc.Equities5.60%
ATRAM Philippine Equity Opportunity Fund, Inc.Equities5.60%
ALFM Dollar Bond Fund, Inc.Bond5.00%
ALFM Euro Bond Fund, Inc.Bond5.00%
ALFM Global Multi-Asset Income Fund Inc.Feeder5.00%
ATRAM Dynamic Allocation Fund, Inc.Balanced5.00%
ATRAM Philippine Balanced Fund, Inc.Balanced5.00%
ATRAM Total Return Dollar Bond Fund, Inc.Bond5.00%
MBG Equity Investment Fund, Inc.Equities5.00%
Philequity Alpha One Fund, Inc.Equities5.00%
Philequity Dividend Yield Fund, Inc.Equities5.00%
Philequity Fund, Inc.Equities5.00%
Philequity MSCI Philippine Index Fund, Inc.Index5.00%
Sun Life Prosperity Achiever Fund 2028, Inc.Balanced0% to 5%
Sun Life Prosperity Achiever Fund 2038, Inc.Balanced0% to 5%
Sun Life Prosperity Achiever Fund 2048, Inc.Balanced0% to 5%
Sun Life Prosperity Dollar Starter Fund, Inc.Money market0% to 5%
Sun Life Prosperity Money Market Fund, Inc.Money market0% to 5%
Sun Life Prosperity World Equity Index Feeder Fund, Inc.Feeder0.50% to 2% (front); 0% to 5%
Philequity PSE Index Fund Inc.Index3.50%
NCM Mutual Fund of the Phils., Inc.Balanced3.36%
PAMI Asia Balanced Fund, Inc.Balanced3.36%
PAMI Equity Index Fund, Inc.Index3.36%
Soldivo Bond Fund, Inc.Bond3.36%
Soldivo Strategic Growth Fund, Inc.Equities3.36%
ALFM Growth Fund, Inc.Equities3.00%
ALFM Money Market Fund, Inc.Money market3.00%
PAMI Global Bond Fund, IncBond3.00%
Philam Bond Fund, Inc.Bond3.00%
Philam Dollar Bond Fund, Inc.Bond3.00%
Philam Fund, Inc.Balanced3.00%
Philam Strategic Growth Fund, Inc.Equities3.00%
PAMI Horizon Fund, Inc.Balanced2.80%
ATRAM AsiaPlus Equity Fund, Inc.Equities2.24%
ATRAM Corporate Bond Fund, Inc.Bond2.24%
Climbs Share Capital Equity Investment Fund Corp.Equities2.00%
Cocolife Fixed Income Fund, Inc.Bond2.00%
Ekklesia Mutual Fund Inc.Bond2.00%
First Metro Consumer Fund on MSCI Phils. Inc.Equities2.00%
First Metro Save and Learn Balanced Fund Inc.Balanced2.00%
First Metro Save and Learn Equity Fund,Inc.Equities2.00%
First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund, Inc.Balanced0.50% to 2%
First Metro Save and Learn Fixed Income Fund,Inc.Bond2.00%
First Metro Save and Learn Philippine Index Fund, Inc.Index2.00%
Sun Life of Canada Prosperity Balanced Fund, Inc.Balanced2.00%
Sun Life of Canada Prosperity Bond Fund, Inc.Bond2.00%
Sun Life Prosperity Dollar Abundance Fund, Inc.Bond2.00%
Sun Life Prosperity Dollar Advantage Fund, Inc.Balanced2.00%
Sun Life Prosperity Dollar Wellspring Fund, Inc.Balanced2.00%
Sun Life Prosperity Dynamic Fund, Inc.Balanced2.00%
Sun Life Prosperity GS Fund, Inc.Bond2.00%
Sun Life Prosperity Philippine Equity Fund, Inc.Equities2.00%
Sun Life Prosperity Philippine Stock Index Fund, Inc.Index2.00%
Sun Life Prosperity World Voyager Fund, Inc.Equities2.00%
United Fund, Inc.Equities2.00%
Philippine Stock Index Fund Corp.Index1.50%
Solidaritas Fund, Inc.Balanced1.50%
ALFM Peso Bond Fund, Inc.Bond1.25%
First Metro Phil. Equity Exchange Traded Fund, Inc.Index1.19%*
First Metro Save and Learn Dollar Bond Fund, Inc.Bond1.00%
Philequity Dollar Income Fund Inc.Bond1.00%
Philequity Peso Bond Fund, Inc.Bond1.00%
Cocolife Dollar Fund Builder, Inc.Balanced0.50%
First Metro Save and Learn Money Market Fund, Inc.Money marketNone
Philam Managed Income Fund, Inc.Money marketNone

First Metro Phil. Equity Exchange Traded Fund, Inc. is an exchange traded fund and it is traded like a stock investment. The fees include purchasing (total of 0.295%) and redeeming the stocks (0.895%).

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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 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 more 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 place 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 putting in that amount for three decades in a 5%-, 2%- and 0%-fee, this is how the total invested amount would looked like.

12,000 per month22,80023,52024,000
2 45,60047,04048,000
3 68,40070,56072,000
4 91,20094,08096,000
5 114,000117,600120,000
10 228,000235,200240,000
15 342,000352,800360,000
20 456,000470,400480,000
25 570,000588,000600,000
30 684,000705,600720,000

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.

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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:

  • An investment capital of 1 million pesos.
  • The fund grows 7% annually. This is only a math projection. Actual results vary.
  • Time horizon is 30 years.
2 1,087,6551,122,0021,144,900
3 1,163,7911,200,5421,225,043
4 1,245,2561,284,5801,310,796
5 1,332,4241,374,5011,402,552
10 1,868,7941,927,8081,967,151
15 2,621,0802,703,8512,759,032
20 3,676,2003,792,2913,869,684
25 5,156,0615,318,8845,427,433
30 7,231,6427,460,0107,612,255

Zero-fee is the clear winner. It also allows you to gain the most compared to the other options that have the fee. As you can see from the table, a 1 million capital will grow to ₱7,612,255 compared to ₱7,460,010 (for 2% fee) and ₱7,231,642 (for 5% fee).

And here is another scenario where a ₱24,000 annual investment is made.

5 120,000140,295144,725147,679
10 240,000337,066347,710354,806
15 360,000613,048632,407645,313
20 480,0001,000,1261,031,7091,052,764
25 600,0001,543,0241,591,7511,624,235
30 720,0002,304,4652,377,2382,425,753

Strategies to avoid mutual fund sales load

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

  1. Choose a sales load-free fund.
  2. Be an IMG member
  3. Open a stock broker’s account that offers zero sales load mutual funds.
  4. Go for UITF.
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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 where you can lessen your cost but does not suit you, and that is not good because you may end up making decisions unfavorable to you in the long run.

For instance, you might be in a low-cost, low-risk fund which might deprive you of the chance to earn higher in an aggressive fund.

2. Be an IMG member

International Marketing Group or IMG 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 ₱3,000 to ₱4,500, 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 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.

There are four online stock brokerage companies that offer mutual funds where you can avoid paying sales load: AB Capital Securities, Inc., COL Financial, First Metro Securities, and Unicapital Securities (UTrade).

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.

AB Capital Securities, Inc. does not charge front-end fee. Funds that are available include those being offered by ATRAM, First Metro Asset Management Inc. (FAMI), PHILAM Asset Management Inc., and Sun Life Asset Management. Nowhere on their website mentioned that they also waive the back-end fee, so please do reach out to them or read the prospectus of the MF products available on their platform.

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 you don’t have to pay the sales load.

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.

Unicapital Securities also offer mutual funds with zero sales load as well as access to fixed income securities. The mutual funds they can facilitate your subscription at are: BPI Investment Management, Inc. (ALFM), First Metro Asset Management, Inc. (FAMI), Philam Asset Management, Inc. (PAMI), Philequity Asset Management, Inc. (PEMI), and Sunlife Asset Management, Inc. (SLAMCI).

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.


  1. Reduce cost of investing as low as possible in order to maximize gains.
  2. You can avoid paying sales load. There are funds out there that do not charge them.
  3. Sales load diminishes capital. It also drags potential earnings when investing long term.
  4. Invest in a fund that suits your investor profile (risk appetite, time horizon, etc.) and one that has the least cost.
  5. There are four ways to avoid sales load: shop around to find a fund with zero sales load, sign up as IMG member if you think you can enjoy most of their benefits and take advantage of their zero-sales load MFs, open stock broker accounts like COL Financial and First Metro Securities, or invest in UITFs.


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