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No Transaction Fee Mutual Fund


A No Transaction Fee Mutual Fund is a type of investment fund where the investor doesn’t have to pay any transaction charges to buy or sell shares. This means there are no commissions or loads when investors make investments or withdrawals. These funds are often offered directly from the investment company or through a mutual fund supermarket.


The phonetic spelling for “No Transaction Fee Mutual Fund” would be “Noh Tranz-ak-shun Fee Myoo-choo-ul Fund”.

Key Takeaways

  1. No Transaction Fee Mutual Funds, also known as NTF Mutual Funds, allow investors to buy, sell, and exchange mutual fund shares without having to pay brokerage transaction fees. This makes them an appealing option for investors looking to minimize trading costs.
  2. Generally, NTF Mutual Funds earn their income through expense ratios, which is a continuous annual fee charged as a percentage of your investment in the fund. However, these fees are often substantially lower than transaction costs and can offer significant savings over time.
  3. It’s essential to scrutinize the expense ratios and other underlying costs of NTF Mutual Funds. While they do not charge transaction fees, the total cost burden may still be high if their expense ratios or other administrative fees are high. Therefore, it is important to carefully consider your overall costs before selecting any mutual fund.


The term “No Transaction Fee Mutual Fund” is important in business/finance because it refers to a mutual fund that does not charge investors any type of transaction fee. Mutual funds usually involve various types of fees and expenses, including transaction fees, which are charges applied to investors when they buy or sell shares. However, some mutual funds do not charge these transaction fees. For investors, choosing a no transaction fee mutual fund can make a significant impact on their overall return as it helps lower the cost of investment, thereby making these funds a potentially more profitable investment option. It encourages cost-efficiency and allows investors to keep more of their potential earnings.


The purpose of a No Transaction Fee (NTF) mutual fund is essentially to provide a cost-effective investment opportunity to investors who do not wish to pay a commission every time they buy or sell a fund. Commissions on mutual funds can add up significantly over time and affect the overall returns to an investor, particularly those who engage in frequent buying and selling. Therefore, the provision of no transaction fee mutual funds serves to alleviate this cost burden from investors, making investing more affordable. No Transaction Fee mutual funds are often used by individual investors for their retirement plans or other savings plans as a long-term investment strategy. The fund’s use is also beneficial to those who prefer a more passive investment approach or who are engaging in systematic investing, such as dollar-cost averaging. These types of investors will typically make frequent mutual fund transactions, and thus, the absence of transaction fees can save them a significant amount of money over time. Overall, NTF mutual funds attract investors who are seeking to avoid extra costs in pursuing their investment strategy.


1. Vanguard Mutual Funds: Vanguard is widely known for its low-cost mutual funds which offer no transaction fee mutual funds. This allows investors to buy, sell, and exchange mutual funds from Vanguard without having to pay a fee for each transaction.2. Fidelity Investments: A well-known financial services corporation, Fidelity offers a variety of no transaction fee mutual funds which means customers are not charged a transaction fee when they buy or sell these fund shares.3. Charles Schwab: This brokerage firm offers a wide range of mutual funds. Charles Schwab offers over 4,000 no transaction fee mutual funds. This allows investors to diversify their portfolios without worrying about transaction fees eating into their returns.

Frequently Asked Questions(FAQ)

What is a No Transaction Fee Mutual Fund?

This is a type of mutual fund where the investor does not have to pay any transaction fees. The costs associated with purchasing, selling, or transferring funds are covered by the fund itself.

How does a No Transaction Fee Mutual Fund work?

In this type of mutual fund, the fund itself directly absorbs any trading costs. This means that the investor doesn’t incur charges for fund transactions, such as buying or selling units.

Are there any hidden costs in No Transaction Fee Mutual Funds?

While there are no transaction fees in this type of funds, it’s still crucial to look into other costs or fees, such as ongoing expense ratios, management fees, or early redemption fees.

How will investing in No Transaction Fee Mutual Funds affect my returns?

Since you’re not liable for transaction fees, more of your money goes directly into the investment, which could potentially lead to higher returns. However, other costs such as expense ratios may still apply and affect your overall returns.

Can a No Transaction Fee Mutual Fund have higher expense ratios?

Yes. Since the funds cover transaction costs, they may charge higher expense ratios, which cover overall fund operating expenses. Always look at all fees associated with any fund before investing.

Are No Transaction Fee Mutual Funds suitable for short-term or long-term investors?

Both types of investors can benefit from these funds. Short-term investors can avoid transaction costs on frequent buys and sells, while long-term investors can accumulate more returns as more of their money is invested.

Where can I find No Transaction Fee Mutual Funds?

Many brokerage firms and mutual fund companies offer No Transaction Fee platforms where numerous such mutual funds are available for direct purchase, sale, or exchange without incurring any transaction fees.

What is the catch with No Transaction Fee Mutual Funds?

While these funds do not have transaction costs, they might have other fees like higher expense ratios or early redemption fees. It’s also possible that these funds might have slightly lower returns compared to funds that charge transaction fees, as the fund covers these costs. Always understand the full fee structure before investing.

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