No-load funds are sold without a commission or sales charge.
Investors looking to keep their expenses low when it comes to investing in mutual funds may look to no-load mutual funds. A no-load fund is a mutual fund that allows investors to transact mutual fund shares without paying charges and commissions carried by load funds. With no-load funds, you don’t pay fees when withdrawing or depositing your money. With industry competition and technology granting greater access to investors, expenses are falling. Fewer expenses mean higher earning power and more money in your pocket to invest. Here are seven of the best no-load mutual funds.
Fidelity Blue Chip Growth Fund (ticker: FBGRX)
FBGRX holds companies that are top performers in their markets, which means these stocks may not be as risky as small- or mid-cap stocks. The top 10 holdings make up more than 40% of the total portfolio. These include industry staples such as Amazon.com (AMZN), Apple (AAPL), Microsoft Corp. (MSFT) and Facebook (FB), but the fund also holds Tesla (TSLA) as a top holding, which has enhanced the fund’s performance. TSLA stock is up about 200% year over year. FBGRX is heavily allocated toward information technology, a sector that has experienced high growth throughout the past year alone. It has also performed well during the past 10 years, beating the Russell 1000 Growth index.
Vanguard Emerging Markets Bond Fund (VEMBX)
VEMBX invests in bonds issued by emerging market countries. EM funds may have lower credit quality, making them riskier assets compared to bonds from developed countries, but they tend to have higher yields. Fixed-income investors seeking higher returns and diversification may be interested in EM bonds since they may perform well. VEMBX’s average one-year return is a competitive 14%. The fund has more than 200 bond holdings from countries such as Turkey, Brazil, Russia, South Africa and others. While investors need to consider that these assets are riskier and more volatile, with low interest rates in the U.S. and lower-than-expected returns from investment-grade bonds, the prospect of investing in emerging market bonds has appeal.
Schwab S&P 500 Index Fund (SWPPX)
SWPPX invests in approximately 500 of the best U.S. companies, following the S&P 500 as its benchmark. Information technology makes up about 26% of the portfolio’s sector weight, holding some of the Big Tech names in its top 10 holdings including Apple, Microsoft, Facebook and Alphabet (GOOG, GOOGL). “The Schwab S&P 500 fund provides what an index fund should — broad exposure to large-cap U.S. stocks at an extremely low cost,” says Martha Post, chartered financial analyst and chief operating officer of Team Hewins, a wealth management firm. The fund has a 0.02% expense ratio. “Few active managers outperform indexes over the long term, especially in an asset class like large cap, and they tend to have higher turnover, making them less tax-efficient,” Post says. SWPPX has a low portfolio turnover rate of about 4.4%, which means the fund follows a buy-and-hold strategy with lower fund expenses, making it best for the investor who prefers a low-cost, passive investment approach.
Fidelity Small Cap Value Fund (FCPVX)
Investors may want to consider adding exposure to small-cap stocks and value stocks because they both perform well during economic growth and recovery, says Mary Ellen McGonagle, senior managing director of stocks for educational stock market platform Simpler Trading. “The Fidelity Small Cap Value Fund is ideal as it invests in undervalued, smaller companies poised to benefit from the current period of strong economic growth,” she says. FCPVX has exhibited strong performance. Average one-year annual returns for the fund are about 90%, and year to date, the fund has returned about 35%. The fund’s managers pick individual stocks that they believe will have long-term outperformance. Some of the individual names held in the fund with influential performance are Bed Bath & Beyond (BBBY), Signature Bank (SBNY) and Western Alliance Bancorp (WAL), up 84%, 82% and 65% year to date, respectively.
Vanguard Value Index Fund (VVIAX)
VVIAX invests in large-cap stocks that analysts believe to be undervalued. As the economy continues to reopen, experts believe this will benefit value stocks that will be poised to grow. The fund tracks the performance of the CRSP U.S. Large Cap Value index, which is mostly made up of large-cap value stocks, and it holds each stock at about the same allocation as the index. VVIAX’s low expense ratio of 0.05% combined with its current yield of 2.11%, is suitable for investors seeking dividends and growth potential. The fund has nearly matched the returns of the Spliced Value index benchmark with a 10-year average annual return of 12.16%.
T. Rowe Price Growth Stock Fund (PRGFX)
Historically, the Russell 1000 Growth index has outperformed the Russell 1000 Value index. In 2020 alone, the Russell 1000 Growth returned 38.5% while the Russell 1000 Value returned 2.8%. It’s worth considering having a long-term strategic allocation to growth stocks since PRGFX has outperformed the S&P 500 since inception. In a low interest rate environment, growth stocks tend to perform better. Many growth stocks also come from the technology sector, which has been a positive disruptor. The fund’s top 10 holdings include Big Tech stocks as well as financial companies such as Visa (V) and Mastercard (MA), and altogether they make up about 47% of the total portfolio. While value stocks tend to perform better than growth during an economic recovery, the fundamentals of growth are strong. That said, it could make sense to have a mix of both types.
Fidelity Value Strategies Fund (FSLSX)
FSLSX is a fund for the long-term value investor looking for capital appreciation by investing in value stocks. If your portfolio is weighted toward large-cap companies, FSLSX allows you to diversify your holdings with mid-cap companies. “This is a well-diversified fund that incorporates traditional value stocks with a small percent of growth stocks benefiting from the reopening of the U.S.,” McGonagle says. The fund’s manager focuses on finding value in sectors such as financials, materials and energy that may benefit following economic difficulty. FSLSX has a one-year return of 74% and is up about 27% this year.
Best no-load mutual funds:
— Fidelity Blue Chip Growth Fund (FBGRX)
— Vanguard Emerging Markets Bond Fund (VEMBX)
— Schwab S&P 500 Index Fund (SWPPX)
— Fidelity Small Cap Value Fund (FCPVX)
— Vanguard Value Index Fund (VVIAX)
— T. Rowe Price Growth Stock Fund (PRGFX)
— Fidelity Value Strategies Fund (FSLSX)