5 Top No-Load Mutual Funds For 2020

U.S. equities may have wrapped up 2019 with a decent performance, but the major benchmarks’ gains could have been much higher if not for the trade-related concerns and global growth slowdown that bothered investors for the most of last year. Trade uncertainties also weighed on the country’s economic growth last year, leading the Federal Reserve to slash benchmark rates thrice.

In fact, the somewhat dim performance of the equities could persist in 2020, given that trade tensions haven’t subsided completely.

U.S.-China Trade Resolution Doesn’t Appear Permanent

The fourth quarter of 2019 was quite eventful with the United States and China taking major leaps in trade talks. The two countries finally settled on an initial trade deal that appears to resolve some of the issues both argued on over the last two years.

The deal was signed by President Donald Trump and Chinese vice premier Liu He earlier this month. However, certain agreed upon portions of the deal come with unrealistic targets and analysts have questioned if those are feasible at all.

For example, China agreed to buy an additional $200 billion of American products over the next two years. This is somewhat impractical since the Asian country would have to buy more than double of its current purchases.

Second, finer details of products that were promised by China to be purchased over the next two years couldn’t be ascertained. These include farm purchases such as pork and soybeans.

Finally, although the trade war was initiated by President Trump to protect American technologies from being copied or stolen by Chinese firms, in the last two years China has made serious efforts to decrease its reliance on U.S. technologies instead.

For example, the country has made significant progress in producing its own semiconductors, driverless cars, AI and other technologies. This is likely to hurt U.S. technology companies in the long run.

Why Invest in No-Load Funds

Given the tension-ridden scenario, one could consider investing in no-load mutual funds. First, no-load funds are a great way to avoid high fees since these funds do not have a front-end or back-end load as that of load funds.

Second, the gross returns of a no-load mutual fund are deduced to cover the expenses required to manage the fund’s portfolio. Therefore, no-load funds that have lower expense ratios offer higher returns to mutual fund investors.

5 Top No-Load Funds

We have, therefore, selected five no-load mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). In addition, the minimum initial investment for these funds is within $5,000.

We expect these funds to outperform their 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: Zacks Investment Research

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Written By: Zacks Investment Research