Best No-Load Mutual Funds

Check out the best no-load mutual funds to round out your portfolio for 2024.

Looking for affordable mutual funds for your retirement nest egg? No-load funds take commissions off the table, leaving more capital in your account to grow and earn. Here’s how no-load funds work and the six you should consider in 2024.

No Load Mutual Funds

No-load mutual funds are cost-effective because they don't charge up front or back end sales fees. Removing this layer of fees makes these assets appealing to self-directed investors who prefer to manage their portfolios independently. When evaluating no-load funds, review their historical performance against index benchmarks and compare expense ratios, which represent the annual cost of owning the fund. Lower expense ratios generally lead to better long-term returns.

To choose the right no-load fund, look for diversified holdings, a clear investment strategy, a solid asset base and a low expense rate. Review the fund's prospectus to ensure you understand all fees and expenses and remember that past performance does not indicate future results. Conduct thorough research and align your mutual fund choices with your financial goals and risk tolerance.

Why Should You Invest in No-Load Mutual Funds?

Why no-load mutual funds? Here are three reasons to consider adding them to your investment portfolio (especially if you have a 401(k) retirement account):

Cost Efficiency

No-load mutual funds are a budget-friendly investment option that eliminates sales charges. This means all your capital goes directly into the fund, providing more potential to grow over time. Unlike traditional mutual funds with up front or back end fees, no-load funds allow you to keep more of your money working for you, making them an attractive choice for investors looking to maximize their returns and minimize costs.

Transparent Fees

No-load mutual funds promote transparency by clearly stating fees. When you adjust your asset allocation or close a position, you won’t be surprised by a sales charge or commission. No-load funds provide investors with the information needed to make informed decisions.

Investment Flexibility

You can buy and sell shares without worrying about commissions, which is ideal for frequent traders and long-term investors. Whether saving for retirement, a down payment on a house or simply building wealth, no-load mutual funds provide a flexible and cost-effective solution. And if you’re saving in a 401(k) account, no-load mutual funds are likely your best option.

Choosing the Right No-Load Mutual Funds

When choosing no-load mutual funds for your portfolio, keep the following three factors in mind:

• Low Expense Rates - Investors can’t influence the gyrations of markets or the economy's direction, but they can control how much they invest and what they pay for their assets. Expense rates vary based on fund size and strategy, but always compare similar funds and consider going with the lowest-cost option.

• Alignment with Investment Goals - Choose funds that match your investment objectives, whether long-term growth, income generation or a balanced approach. Consider fortifying your portfolio with multiple mutual funds to enhance diversification and reduce risk.

• Track Record - Consider the fund's past performance and management's history and experience. Thanks to their tax efficiency and low costs, we've selected all index funds here, but that doesn’t mean they’re run on Autopilot. When buying index funds, consider the issuer’s objectives and mission.

The Best Performing No-Load Mutual Funds

Here are seven top no-load mutual funds available as 2024 draws close. We’ve selected funds based on their expenses, strategy, size and issuer quality.

1. Fidelity Zero Large Cap Index Fund (FNILX)

FNILX is a large-cap U.S. stock fund comprised of the biggest companies in the S&P 500. Its holdings are similar to other large-cap S&P 500 funds, so turnover and capital gains distributions occur at a frequency similar to Schwab and Vanguard competitors. However, the expense rate is 0.00%, making it the cheapest S&P 500 index mutual fund to own.

Why We Picked It: Did we mention the 0.00% expense rate? Fidelity’s ZERO fund family offers no-load, no-fee, no-expense rate index funds, so every dollar of capital you invest goes toward growth and income.

2. Schwab 1000 Index Fund (SNXFX)

The Schwab 1000 is a blend of the 1,000 largest public companies in the United States, with holdings concentrated in tech, finance and health care. The fund charges a 0.05% expense ratio and has been trading since October 1991. As of this writing, it has over $18 billion in assets.

Why We Picked It: SNXFX trades commission- and sales-charge-free on Schwab’s platform, giving investors a cost-effective way to access a blended portfolio of small, mid- and large-cap stocks.

3. Fidelity U.S. Bond Index Fund (FXNAX)

Bond funds should also be represented on this list. The Fidelity U.S. Bond Index combines Treasuries with corporate bonds and mortgage-backed securities (MBS) into a diverse fixed-income portfolio. The average duration of the fund’s holdings is six years and the current 30-day dividend yield is 4.34%.

Why We Picked It: For an expense ratio of a mere 0.025%, FXNAX holders get a broad-based bond fund with a strong yield, a robust collection of fixed-income assets and no investment minimums.

4. Vanguard Short-Term Inflation-Protected Securities Index Fund (VTAPX)

Treasury Inflation-Protected Securities (TIPS) are linked to the Consumer Price Index (CPI) and are designed to protect investors' purchasing power during times of high inflation. If you believe inflation could increase in the next few months (or years), a short-term TIPS fund like VTAPX makes sense to preserve wealth.

Why We Picked It: VTAPX has a low expense rate and purchases all inflation-protected securities issued by the Treasury for a duration of under five years. There’s a $2,500 minimum, but it's the most affordable and well-balanced no-load TIPS fund.

5. Schwab U.S. Mid-Cap Index Fund (SWMCX)

Mid-caps often slip through the cracks in a portfolio and SWMCX focuses on that middle 20% of U.S. companies by market cap. Mid-cap funds provide a way to avoid a heavy tech concentration in U.S. stocks, as their holdings are more heavily concentrated in industrials and finance.

Why We Picked It: SWMCX has a tiny 0.04% expense rate and a $1 minimum. The fund’s most significant holdings are companies not well-represented in large-cap funds, such as Palantir Technologies, Williams Companies and Simon Property Group. The average market cap of a stock in the index is $21.4 billion and 98% of its assets are U.S. companies.

6. Vanguard Dividend Appreciation Index Fund (VDADX)

Another way to avoid a tech-heavy concentration is through dividend-paying companies, which tend to reside in more mature sectors. Dividend stocks may not offer as much growth potential, but they provide income through dividends while benefiting from stock price appreciation. VDADX is Vanguard’s dividend stock fund with a 0.08% expense ratio and 338 holdings, primarily large-cap U.S. companies.

Why We Picked It: VDADX has gained 20% in 2024, combined with steady income from dividend payouts. The 0.08% expense rate is low for a dividend stock fund and its portfolio includes mature blue-chip companies such as Apple, Broadcom, JPMorgan Chase and UnitedHealth Group.

Should You Invest in No-Load Mutual Funds?

If you’re a long-term saver looking for low-cost, low-hassle investment options, no-load mutual funds are a fantastic asset class. In accounts like a 401(k), mutual funds are often the only securities available for purchase, so reducing fees is paramount to maximizing returns. No-load funds remove commissions and while that doesn’t make them completely free to trade, it does create an environment comparable to ETFs, which now trade commission-free at most brokerages. If you’re saving for retirement in a 401(k) account, low-cost, no-load funds are often the way to go.

No-Load Mutual Funds are Great Long-Term Investments, But Not Ideal for All Investors

No-load mutual funds are efficient, varied and easy for investors to buy and hold for the long term. Just make sure these funds suit your investment goals. Not every investor needs mutual funds in their portfolio, so consult your advisor to ensure you have the proper asset balance to achieve your goals.