Recent domestic and geopolitical issues have caused a sharp reversal in investor sentiment, moving from a resilient, record-setting market to a sell-off triggered by disappointing July jobs data and new tariffs imposed by President Trump on a range of trading partners. However, Gross Domestic Product showed a positive turnaround in Q2 2025, with a 3.0% annualized growth rate after a contraction in Q1.

Inflation, as measured by the Fed's preferred Personal Consumption Expenditures (PCE) price index, rose to 2.6% in June compared to 2.4% in May, a reading that is stubbornly holding above the central bank's 2% target. A much weaker-than-expected July jobs report raised concerns about a slowing economy. The monthly nonfarm payrolls reported that U.S. employers added 73,000 jobs in July, far below the consensus estimate of 115,000. The unemployment rate ticked up to 4.2%. The combination of a rapidly cooling labor market and escalating trade tensions has put significant pressure on the Federal Reserve to consider a rate cut shortly to support employment and growth.

Amid the current market conditions, investors looking for higher returns can consider no-load mutual funds like Fidelity Select Semiconductors Portfolio (FSELX Quick QuoteFSELX - Free Report) , DWS Science and Technology (KTCSX Quick QuoteKTCSX - Free Report) and Invesco SteelPath MLP Select 40 (MLPTX Quick QuoteMLPTX - Free Report) as these have a low expense ratio, which can translate into higher returns. Other factors such as the funds’ performance history, investment style and risk tolerance also act in their favor.

Why Choose No-Load Mutual Funds Now?

Investors with disposable income who wish to diversify their portfolios can opt for no-load mutual funds. These passively managed funds don’t have any commission fees or any other charges for buying and selling that are generally associated with actively managed funds.

The sales charges — referred to as a “front-end load,” which is charged upon purchasing shares, or “back-end load,” which is charged upon the selling of shares — are absent in such funds because shares are distributed directly by the investment company, instead of any third-party involvement like a broker, advisor or other professionals.

Even a few additional basis points saved in fees can boost the overall return by minimizing expenses. However, charges like the fund’s expense ratio, 12b-1 fees for marketing, distribution, and service, redemption fees, exchange fees, and account fees are commonly charged even if there is no load.

A Hypothetical Example

The load charges are generally within the range of 0-6%. To understand the math, let’s assume an investor wants to invest $1000 in a mutual fund that has a 5% entry and exit load. Then, $950 ($1000-$50 [5% of $1000]) is left with the mutual fund house to invest. Now, let’s assume the fund has given a 15% return over the year. So, the current value of the portfolio is $1092.5 ($950+ $142.5 [15% of $950]). Now, when an exit load of 5% is applied, the investor is left with $1037.87 ($1092.5-$54.63 [5% of $1092.5]).

According to the above hypothesis, the returns earned by the investor with front and back load are 3.78%, whereas he could have enjoyed a much higher return without load.

We have thus selected three no-load mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Semiconductors Portfolio invests most of its net assets in common stocks of domestic and foreign companies that areprincipally engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FSELX chooses to invest in stocks based on fundamental analysis factors such as each issuer's financial condition and industry position, and market and economic conditions.

Adam Benjamin has been the lead manager of FSELX since March 15, 2020. Most of the fund’s exposure was to companies like NVIDIA (25.0%), Taiwan Semiconductor Manufacturing (8.3%) and Broadcom (8%) as of Feb. 28, 2025.

FSELX’s three-year and five-year annualized returns are nearly 44.8% and 32.9%, respectively. FSELX has an annual expense ratio of 0.62%.

To see how this fund performed compared to its category and other 1, 2, and 3 Ranked Mutual Funds, please click here.

DWS Science and Technology fund invests most of its assets, along with borrowings, if any, in common stocks and initial public offerings of domestic science and technology companies, irrespective of their market capitalization. KTCSX advisors may also invest in foreign companies from the technology sector or other industries within the technology sector from developed and emerging market economies.

Sebastian P. Werner has been the lead manager of KTCSX since Dec. 1, 2017. Most of the fund’s exposure was in companies like Microsoft (9.4%), NVIDIA (8.5%) and Meta Platforms (8.4%) as of April 30, 2025.

KTCSX’s three-year and five-year annualized returns are 30.8% and 18.3%, respectively. KTCSX has an annual expense ratio of 0.68%.

Invesco SteelPath MLP Select 40 fund invests most of its assets, along with borrowings, if any, in the master limited partnership of companies, which are engaged in the transportation, storage, processing, refining, marketing, exploration, production, and mining of minerals and natural resources. MLPTX advisors also invest in derivatives and other instruments with similar economic characteristics in the same industry.

Stuart Cartner has been the lead manager of MLPTX since April 1, 2010. Most of the fund’s exposure was in companies such as MPLX (8.4%), Energy Transfer (7.8%) and Western Midstream Partners(7%) as of Feb. 28, 2025.

MLPTX’s three-year and five-year annualized returns are 25.7% and 28.6%, respectively. MLPTX has an annual expense ratio of 1.01%.

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