Amid various domestic and geopolitical tensions, Wall Street has managed to give investors positive returns so far this year. The Dow, the S&P 500 and the tech-heavy NASDAQ have registered positive returns of 8.5%, 19% and 35.9%, year to date. After inflation in the United States showed signs of cooling, investors' confidence gained due to rising hopes that the Federal Reserve may now be less aggressive with its monetary policy.

The consumer price index (CPI) for the month of October remains unchanged from the previous month at 0.4% on a seasonally adjusted basis. The annual rise in underlying inflation was the smallest in two years. For 12 months through October, CPI climbed 3.2% after rising 3.7% in September before seasonal adjustment.

Also, the producer price index (PPI), which measures wholesale inflation, recorded the biggest monthly decline since April 2020. PPI for the month of October declined 0.5% against the street’s expectation of a 0.1% increase. On a yearly basis, PPI posted a 1.3% increase, down from 2.2% in September, suggesting that the worst of the inflation surge may have passed.

Although the Federal Reserve’s inflation target of 2% is far from met, investors are expecting the central bank to be less hawkish and, in the process, reduce the borrowing cost. Investors are still worried as the Federal Reserve has kept the door open for further rate hikes or can keep the interest rate high for longer to win the inflation battle.

On the international front, tensions in the Middle East due to the clash between Israel and the Palestine-based militant group Hamas amid ceasefire will also have an impact on corporate profitability and the global supply chain.

Amid such uncertain market conditions, it is prudent for investors to choose funds that have performed well in the past and have no load. 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.

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

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 return earned by the investor with front and back load is 3.78%, whereas he could have enjoyed a much higher return without load.

Wise investors looking for higher returns can consider no-load mutual funds as these have a low expense ratio, which can translate into higher returns, along with other factors like the fund’s performance history, investment style, risk tolerance, etc.

We have thus selected four 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 compared to the category average. 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 Energy (FSENX Quick QuoteFSENX - Free Report) fund invests most of its net assets in common stocks of domestic and foreign companies that areprincipally engaged in the energy field, including the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power. FSENXadvisors choose to invest in stocks based on fundamental analysis factors like financial condition and industry position, along with market and economic conditions.

Maurice FitzMaurice has been the lead manager of FSENX since Dec 31, 2019. Most of the fund’s exposure is in companies like Exxon Mobil (24.9%), Chevron (6.1%) and Sclumberger (4.7%) as of 8/31/2023.

FSENX’s three-year and five-year annualized returns are almost 52.7% and 9.9%, respectively. FSENX has an annual expense ratio of 0.73%, which is less than the category average of 1.07%.

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

BNY Mellon Natural Resources Fund (DLDRX Quick QuoteDLDRX - Free Report) invests most of its assets along with borrowings, if any, in common stocks of domestic and foreign natural resources and natural resources-related sectors companies, irrespective of market capitalization. DLDRX also invests in emerging markets securities with similar economic characteristics.

Brock Campbell has been the lead manager of DLDRX since Aug 22, 2023, and most of the fund’s exposure is in companies like Shell PLC (4.8%), Hess (4.8%) and Teck Resources (4.7%) as of 6/30/2023.

DLDRX’s three-year and five-year annualized returns are 31.5% and 15.1%, respectively. DLDRX has an annual expense ratio of 0.89%, which is less than the category average of 1.11%.

Invesco Small Cap Value (VSMIX Quick QuoteVSMIX - Free Report) invests most of its assets along with borrowings, if any, in common stocks of small-capitalization companies, and in derivatives instruments with similar economic characteristics. VSMIX advisors choose to invest in companies, which according to them, are undervalued.

Jonathan Mueller has been the lead manager of VSMIX since Jun 24, 2010, and most of the fund’s exposure is in companies like Pinnacle Financial Partners (2.8%), Northern Oil & Gas (2.7%) and Lumentum Holdings (2.4%) as of 7/31/2023.

VSMIX’s three-year and five-year annualized returns are 25.1% and 13.4%, respectively. VSMIX has an annual expense ratio of 0.84% compared to the category average of 1.16%.

Fidelity Select Semiconductors Portfolio (FSELX Quick QuoteFSELX - Free Report) 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 Mar 15, 2020. Most of the fund’s exposure was to companies like NVIDIA (24.8%), NXP Semiconductors (8.4%) and ON Semiconductors (8.0%) and as of 8/31/2023.

FSELX‘s three-year and five-year annualized returns are nearly 21.8% and 27.2%, respectively. FSELX has an annual expense ratio of 0.69%, which is less than the category average of 1.05%.

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