8 Best No-Load Mutual Funds

No-load funds are sold without a commission or sales charge.

The best no-load mutual funds might be considered a free lunch for investors. In the past, most mutual funds were expensive to own with front- and back-end loads or commissions. As the industry has evolved, competition has increased. Investors benefit while the universe of no-load mutual funds grows. In most cases, investors buy no-load funds directly from the issuing investment company or a large investment firm such as Fidelity, Schwab or Vanguard. Presently, investors win, as the less you pay in fees, the more money you have to invest for future portfolio growth. Here are eight of the best no-load mutual funds.

Vanguard Total Stock Market Index Fund (ticker: VTSAX)

This fund covers the entire U.S. stock market, making it an ideal core equity holding, says Brandon Renfro, assistant professor of finance at East Texas Baptist University. Just add a bond fund and an international equity holding and you have a completely diversified investment portfolio. "Even if you want to tilt your portfolio toward a given market cap or sector, you can still use VTSAX as a core holding," Renfro adds. This total stock market fund owns around 3,500 stocks from the large-, mid- and small-cap universe. VTSAX closely tracks the CRSP U.S. Total Market Index. The top holdings include well-known names such as Microsoft (MSFT), and Apple (AAPL), just to name a few. It also has an average 10-year return of 12.81%.

Neuberger Berman Small Cap Growth Fund (NSRSX)

This small-cap growth fund pursues outstanding small-cap businesses with growing market share and innovative products and services. The active investment strategy strives to uncover companies that are underfollowed and offer outstanding growth opportunities. Scott Krase, president at CrossPoint Wealth, likes this no-load fund for an individual retirement account or another retirement plan. With a turnover of more than 100%, the fund might generate high tax bills for investors if owned outside of a 401(k) or IRA. The fund uses a bottom-up method of evaluating firms and actively manages the holdings. NSRSX owns more than 100 companies and has a 10-year average annual return of 10.59%. Fifty-five percent of the holdings are in the health care and information technology sectors, while another 18.6% is represented by industrials. The relatively low expense ratio of 0.82% is also competitive.

Vanguard Value Index Fund Admiral Shares (VVIAX)

Despite the average annual return from 1926 through 2018 of 11% for large-cap value stocks versus a 9.2% return for large-cap growth stocks, there are extended periods when growth stocks outperform. Many analysts are predicting a return to value after recent run-ups for growth stocks. This fund invests in large-cap U.S. companies that may be temporarily undervalued. With VVIAX's low 0.05% expense ratio and a current yield of 2.94%, investors seeking dividends and growth potential might consider this no-load index fund. The fund has nearly matched the returns of the spliced value index benchmark with a 10-year average annual return of 10.75%.

Fidelity Contrafund Fund (FCNTX)

Fidelity's stalwart Contrafund is a member of the elite, actively managed, no-load mutual fund cohort that has beaten the returns of the S&P 500 during the past three-, five- and 10-year periods. Run by William Danoff since 1990, this large-cap, diversified fund invests in undervalued companies with sustained, above-average earnings growth. It includes both growth and value stocks. The fund is 91% invested in the U.S., with a smattering of international holdings. Contrafund deviates from the market weightings of the S&P 500 with its largest holdings in information technology, communication services, health care, financials and consumer cyclical sectors. The fund's 0.85% expense ratio has proven to be worth the fee. For investors seeking a no-load mutual fund led by a renowned manager, Contrafund is worth considering.

Vanguard Mortgage-Backed Securities Index Fund (VMBSX)

For investors seeking income, government mortgage-backed securities are an alternative to short-term certificates of deposit or money market mutual funds. The fund invests in U.S. mortgage-backed pass-through securities issued by quasi-governmental agencies, which guarantee the mortgages. "The mortgage sector is the best bond area to invest in at the current time," says Charles Self, chief investment officer at iSectors. Since interest rates are close to zero, the prepayment risk, leading to return of the investor's principal payments, is likely to be minimal. Thus, the yield should remain steady. The diversified no-load index fund owns 892 bonds and currently yields 1.88%. Its 0.07% expense ratio is negligible, while the 10-year average return of 3.05% is on par with the benchmark index. With government backing, this fund is one of the safer ways to invest in the fixed income markets, Self adds.

PIMCO StocksPLUS Short Fund (PSTIX)

For active investors, this fund seeks total return by shorting investments position on the S&P 500. Shorting means selling borrowed shares and buying them back after a market decline, profiting the difference. When the S&P 500 declines, this fund will increase in value. "I think it makes sense to put some money into a fund which will go up when the S&P 500 goes down," says Steven Jon Kaplan, CEO at True Contrarian Investments. The reason to invest in this fund is to hedge your portfolio against falling stock prices. Be aware that when markets rise, this fund will tend to underperform. Think of the potential returns of PSTIX as the negative equivalent of the return of the S&P 500. The fund currently yields 1.88% and sports a reasonable expense ratio of 0.64%.

Schwab International Index Fund (SWISX)

A no-load mutual fund portfolio would be incomplete without a broad international stock fund. This Schwab fund is a sound core holding, with better returns than the category average since 2010. Among the safer international fund choices, this large-cap international fund tracks the holdings of publicly traded non-U.S. companies in developed markets. The largest proportion of stocks come from Japan, the United Kingdom, France, Switzerland, Germany, Australia and the Netherlands. The market cap of the firms is spread across the giant-, large- and mid-cap universe. Investors might consider augmenting this no-load mutual fund with an emerging market offer as well. SWISX has a 0.06% expense ratio and a 3.77% distribution yield.

Fidelity Real Estate Income Fund (FRIFX)

For those who don't own investment real estate, the Fidelity Real Estate Income Fund can augment a diversified no-load mutual fund portfolio. The fund's goal is above-average income and capital growth. It owns various commercial real estate securities such as common stock, preferred stock, corporate bonds and commercial mortgage-backed securities. The current allocation is mainly focused on domestic equities and bonds. FRIFX's securities reflect a range of credit quality, from U.S. government bonds to unrated assets. Top holdings include diverse public real estate investment trusts such as American Tower (AMT). Despite the 0.75% expense ratio, the zero minimum investment requirement and 5.87% yield make this real estate fund one to consider.

Best no-load mutual funds:

-- Vanguard Total Stock Market Index Fund (VTSAX)

-- Neuberger Berman Small Cap Growth Fund (NSRSX)

-- Vanguard Value Index Fund (VVIAX)

-- Fidelity Contrafund Fund (FCNTX)

-- Vanguard Mortgage-Backed Securities Index Fund (VMBSX)

-- PIMCO StocksPLUS Short Fund (PSTIX)

-- Schwab International Index Fund (SWISX)

-- Fidelity Real Estate Income Fund (FRIFX)