8 Best No-Load Mutual Funds to Buy Now
Find simple, low-cost and high-quality funds.
Keeping an eye on mutual fund fees is important for preserving returns in a portfolio. Cost-conscious investors may veer toward no-load mutual funds, which trade with no sales charge or commissions. "No-load mutual funds are a great choice for long-term investors, as they allow you to diversify your portfolio in order to reduce the amount of risk you endure," says Patricia Russell, a certified financial planner and founder of FinanceMarvel. Choosing funds with low or no fees can translate to savings, which can be reinvested to fuel additional portfolio growth. These eight options are the best for no-load fund seekers.
Vanguard Small-Cap Growth Index Fund (VSGAX)
Vanguard is well-known for its array of low-cost mutual funds and exchange-traded fund offerings. John Woods, president and CEO of Southport Capital in Atlanta, recommends VSGAX for those who prefer a passive indexing strategy with minimal fees. In addition to being no-load, the fund has an expense ratio of 0.07%. VSGAX uses the CRSP U.S. Small Cap Growth Index as its benchmark, focusing on small-cap companies with potential for above-average growth. It's rated as higher risk by Vanguard, but that's balanced against strong performance. Since its inception in September 2011, VSGAX has delivered an average annual return of 14.52%.
Vanguard Wellington Fund (VWELX)
VWELX is Vanguard's oldest mutual fund and the nation's oldest balanced fund. Russell says this fund has stood the test of time by following a commonsense investing philosophy. "The securities in VWELX follow the market trends and easily appreciate in value over time," she says. This allows for portfolio growth without requiring investors to overanalyze stock or bond holdings. It falls in the middle of Vanguard's risk scale. Since its inception in 1929, the fund has returned 8.28% on average. VWELX could be a workhorse option, offering stable returns with no loads at a modest 0.25% expense ratio.
Schwab S&P 500 Index Fund (SWPPX)
Kevin Panitch, founder of personal finance site Just Start Investing, says Schwab funds are ideal for the buy-and-hold strategist looking to minimize costs. SWPPX is his pick for the best no-load mutual fund for long-term investing. Using the S&P 500 as its benchmark, the fund allows for diversification through large-cap stock exposure. Microsoft Corp. (MSFT), Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Berkshire Hathaway (BRK.B) compose the top five holdings. SWPPX features an exceptionally low expense ratio at just 0.02% and a respectable 10-year annualized return of 15.81%.
Fidelity Contrafund Fund (FCNTX)
FCNTX is the largest actively managed mutual fund in the world, with a focus on large-cap growth. Russell recommends it as a strong performer that's equipped to easily navigate the market and make critical moves. "The broad range of stocks makes it very unlikely you'll lose much, if anything, over the course of owning the fund," she says. While FCNTX is a zero-load fund, it does carry a slightly higher net expense ratio of 0.82%. It also carries a moderately higher risk rating from Morningstar, but it's proven itself as a strong performer, with 10-year average annual returns of 16.07%.
Schwab Total Stock Market Index Fund (SWTSX)
SWTSX has a composition that's very similar to SWPPX, but the focus is slightly different. Rather than seeking to match the performance of the S&P 500, SWTSX attempts to match the performance of the market in its entirety. Timothy Wiedman, a retired associate professor of business and management at Doane University, says it's one of most highly diversified U.S. stock funds, which translates to lower levels of volatility. He recommends it as one of the best options for low costs and investment minimums, owing to its 0.03% expense ratio. The fund has held its own over the last decade, producing a 15.91% annualized return.
T. Rowe Price Capital Appreciation Fund (PRWCX)
PRWCX is a no-load fund that invests in common stocks. Ronald Rough, director of portfolio management at Financial Services Advisory in Rockville, Maryland, says it's a great choice for more conservative investors who still want to participate in the equity markets. "It's a flexibly managed fund, meaning that it contains both stocks and bonds, and the allocation between the two can vary over time," he says. Though it carries a slightly higher expense ratio of 0.71%, PRWCX has a consistent track record, with 10-year annualized returns of 13.44%.
Jensen Quality Growth Fund (JENSX)
JENSX is a growth-focused fund oriented toward advancing sectors, such as technology and health care. Rough says it sets itself apart from other growth funds by focusing on companies that may not be the traditional high-flyers in the market. For example, core holdings including bigger names such as Microsoft alongside smaller companies like TJX Companies (TJX). He cautions that JENSX may lag when value stocks begin to outperform, but with 10-year annualized returns of 15.84%, it's shown itself to have staying power in the market. The 0.88% expense ratio does make it slightly more expensive than other no-load options.
Vanguard Mid-Cap Index Fund (VIMAX)
VIMAX is a good low-cost pick for splitting the difference between small- and large-cap funds. It's a more aggressive fund, with a focus on mid-cap domestic stocks, but with a 0.05% expense ratio it's ideal for bargain hunters. Financials, industrials and technology account for the largest share of holdings by sector. VIMAX has a 10-year average return of 15.56%, trailing only slightly behind the 15.61% posted by its benchmark, the Spliced Mid Cap Index.
The eight best no-load mutual funds to buy now are:
-- Vanguard Small-Cap Growth Index Fund (VSGAX)
-- Vanguard Wellington Fund (VWELX)
-- Schwab S&P 500 Index Fund (SWPPX)
-- Fidelity Contrafund Fund (FCNTX)
-- Schwab Total Stock Market Index Fund (SWTSX)
-- T. Rowe Price Capital Appreciation Fund (PRWCX)
-- Jensen Quality Growth Fund (JENSX)
-- Vanguard Mid-Cap Index Fund (VIMAX)
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