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5 Best-Performing, No-Load Mutual Funds of 2019 So Far

Zacks Equity Research

Even though U.S. equities have been performing well lately, concerns about a possible US-EU trade war definitely pose a threat to the U.S. economy. And let’s admit, Fed Chair Jerome Powell is currently contemplating a rate cut in the near term as he remains worried about trade uncertainties and global economic growth.

Given such concerns, investing in no-load mutual funds could be ideal.

Fears Over US-EU Trade War

On Jul 10, President Donald Trump ordered a probe into France’s proposal of taxes on large technology companies. The proposal, known as digital services tax, would inflict a 3% tax on total annual revenues of technology giants that offer digital services to French users.

Needless to say, the list of companies under this digital tax fire likely includes American tech giants such as Apple, Alphabet, Amazon and Facebook. The Section 301 investigation ordered by Trump could very well end in retaliatory tariffs and spark a trade war between the United States and European Union.

After all, the French digital tax isn’t the only reason for U.S. tariffs. EU aircraft subsidies, car imports and the Nord Stream 2 gas pipeline between Europe and Russia are a few other reasons why U.S. tariffs on EU could be on the way.

Fed’s Rate Cut Signal Indicates Weakening Economy

Despite rebounding consumer spending in the second quarter and a robust June jobs data, it is hard to ignore the slowdown in business investment, manufacturing activity and housing investment.

In fact, Fed Chair Jerome Powell’s testimony to the House Financial Services Committee and the Senate Banking Committee earlier this week clearly indicates a rate cut, probably in the FOMC meeting scheduled for Jul 30-31. Further, the CME FedWatch, which closely watches FOMC rate moves, is 100% expecting a quarter-point rate cut at the end of this month.

Powell cited that trade uncertainties and weakness in global growth continue to drag the economy. The rate cut is aimed to support the slowing economy, keeping in mind the trade disputes.

Trade uncertainties are a major concern since the United States and China are still negotiating over trade. The countries haven’t stumbled upon a deal as of yet.

Secondly, the United States is also calling for new taxes on steel products from Mexico and China. The commerce department noted earlier this week that fabricated structural steel exporters in the two countries received unfair subsidies. Fresh disputes over trade have erupted with India as well, which is now the United State’s ninth largest trading partner.

What Makes No-Load Funds Lucrative?

Since trade uncertainties are a major concern, investing in no-load funds should be apt. No-load mutual funds are a great way to shun steep fees that mutual fund investors are charged. These funds do not have a front-end or back-end load like that of load funds.

In fact, the gross returns of a no-load mutual fund are deduced to pay for the expenses incurred to manage the fund’s portfolio. Thus, no-load funds with lower expense ratios provide higher returns to investors.

Top 5 Choices

We have selected five no-load mutual funds you could consider adding to your portfolio. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5,000.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

DF Dent Mid-Cap Growth Investor (DFDMX) fund invests the majority of its assets in equity securities of medium-size companies. The fund aims for capital appreciation. The non-diversified fund invests in equity securities listed in the United States which includes common stocks, preferred stocks, securities convertible into U.S. common stocks, real estate investment trusts, American Depositary Receipts and exchange-traded funds.

This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

DFDMX has an annual expense ratio of 0.98%, which is below the category average of 1.18%. The fund has year-to-date return of 31.4% and a minimum initial investment of $2500.

T. Rowe Price New Horizons PRNHX fund mostly invests in a diversified group of small, emerging growth companies. These companies are usually early in their corporate life cycle before they become widely recognized by the investment community. PRNHX seeks for capital growth.

This Zacks sector – Small Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRNHX has an annual expense ratio of 0.77%, which is below the category average of 1.18%. The fund has year-to-date return of 30.5% and a minimum initial investment of $2500.

Janus Henderson Global Technology T JAGTX aims for long-term capital appreciation. The fund invests the majority of its assets in securities of companies that the portfolio managers feel will gain considerably from advances or improvements in technology. The fund invests in U.S. and non-U.S. companies alike.

This Zacks sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

JAGTX has an annual expense ratio of 0.92%, which is below the category average of 1.29%. The fund has year-to-date return of 27.5% and a minimum initial investment of $2500.

Vanguard Mid-Cap Growth Fund Investor Shares VMGRX aims for capital appreciation over the long term. The fund invests the majority of its assets in medium market capitalization companies.VMGRX uses multiple investment advisors and invests in mid-cap companies that the advisor believes has the best potential for growth ahead.

This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VMGRX has an annual expense ratio of 0.36%, which is below the category average of 1.18%. The fund has year-to-date return of 27.7% and a minimum initial investment of $3000.

Principal Mid-Cap Growth J PMGJX fund aims for long-term capital growth. The fund invests the majority of its assets in equity securities of medium market capitalization companies at the time of purchase. The fund considers medium market capitalization companies as those that have market capitalizations in the range of companies in the Russell Midcap Growth Index.

This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PMGJX has an annual expense ratio of 0.96%, which is below the category average of 1.18%. The fund has year-to-date return of 28.2% and a minimum initial investment of $1000.

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