Build a Stronger Portfolio: Why No-Load Funds Deserve Your Attention Right Now

The Current Market Landscape Demands Smarter Investment Choices

The investment landscape heading into mid-2025 presents a mixed picture that leaves many investors hesitant. The S&P 500 has managed a modest 1% gain, while major indices like the Nasdaq Composite and Dow Jones remain essentially flat, down 0.1% and 0.5% respectively since the year started. Several headwinds are creating uncertainty: geopolitical tensions have intensified following Ukraine’s military actions against Russian assets, trade policy remains unpredictable with ongoing tariff discussions affecting major trading partners, and economic data paints a complicated story.

The inflation picture shows some moderation. Personal consumption expenditure—the Federal Reserve’s preferred inflation metric—ticked up 0.1% month-over-month in April and 2.1% year-over-year, a slight improvement from March’s 2.3% reading. Consumer spending, which powers nearly three-quarters of U.S. economic activity, rose 0.2% in April following a stronger 0.7% increase in March. Personal income climbed 0.8% during the same month.

However, employment concerns are mounting. Private payrolls expanded by only 37,000 in May, far below the downwardly revised April figure of 60,000 and significantly short of the 110,000 consensus expectation. The service sector, which represents the bulk of U.S. employment, showed signs of contraction with the ISM Services PMI falling to 49.9 in May from 51.6 in April—any reading below 50 signals declining activity. These mixed signals suggest that investors should focus on finding vehicles that can deliver returns without excessive fees eating into gains.

Understanding No-Load Mutual Funds: A Primer for Cost-Conscious Investors

A no-load mutual fund operates differently from its traditional counterparts in one crucial way: it eliminates sales charges. Rather than paying a “front-end load” when you purchase shares or a “back-end load” when you sell, no-load fund shareholders avoid these intermediary costs entirely because the investment company distributes shares directly to investors without broker or advisor involvement.

The math behind this advantage is straightforward. Consider an investor deploying $1,000 into a fund with a 5% entry and exit load. After the initial 5% charge, only $950 remains invested. Assuming the fund generates a 15% return over the year, the portfolio grows to $1,092.50. Upon exit, the 5% redemption fee reduces final proceeds to $1,037.87—meaning the investor realizes just 3.78% actual returns despite the fund’s strong 15% performance. With a no-load structure, that same investor would keep substantially more.

While no-load funds eliminate front and back-end charges, expenses still apply. Investors encounter the annual expense ratio, 12b-1 fees for marketing and distribution, potential redemption fees, exchange fees, and account maintenance charges. Minimizing even these remaining costs through lower expense ratios can compound into meaningful additional returns over time.

For investors seeking diversification without accumulating multiple individual stocks, no-load mutual funds provide an accessible solution while reducing the transaction friction typically associated with direct equity purchases.

Four Standout No-Load Funds Positioned for Growth

Based on strong fundamental metrics—including Zacks Mutual Fund Rank #1 ratings, positive three and five-year annualized performance, minimum initial investments under $5,000, and lean expense structures—the following funds merit consideration.

Semiconductors: Riding Tech Innovation with FSELX

The Fidelity Select Semiconductors Portfolio (FSELX) positions investors in companies designing, manufacturing, or selling semiconductor technology and equipment globally. Portfolio manager Adam Benjamin has led the fund since March 2020, emphasizing fundamental stock selection based on financial health, competitive positioning, and macroeconomic conditions.

As of late February 2025, FSELX held meaningful positions in industry leaders: NVIDIA commanded 25.0% of holdings, Taiwan Semiconductor Manufacturing represented 8.3%, and Broadcom accounted for 8%. The fund’s three-year annualized return reached 24.4%, while the five-year figure climbed to 28.3%—substantially outpacing broad market benchmarks. Management accomplishes this with an annual expense ratio of just 0.62%, keeping more gains in investor pockets. For those bullish on continued technological advancement and semiconductor demand, this no-load fund offers compelling exposure at reasonable cost.

Energy Infrastructure: Steady Returns with MLPTX

The Invesco SteelPath MLP Select 40 (MLPTX) takes a different approach, concentrating on master limited partnerships engaged in natural resource transportation, storage, processing, refining, marketing, and extraction. Manager Stuart Cartner has overseen the strategy since April 2010, maintaining a disciplined focus on the sector’s most promising entities.

MLPTX’s portfolio emphasis as of February 2025 included MPLX at 8.4%, Energy Transfer at 7.8%, and Western Midstream Partners at 7%. Despite the sector’s volatility, the fund delivered three-year annualized returns of 20.10% and five-year returns of 28.4%. The 1.01% annual expense ratio remains competitive within its peer category. For income-focused investors seeking exposure to energy infrastructure through a no-load vehicle, this fund provides structural dividends alongside growth potential.

Technology-Focused Growth: Broad Exposure via KTCSX

The DWS Science and Technology fund (KTCSX) invests predominantly in domestic technology companies regardless of size, with flexibility to include foreign technology firms from both developed and emerging markets. Sebastian Werner has managed this fund since December 2017, employing a growth-oriented stock selection methodology.

KTCSX’s largest holdings as of January 2025 reflected tech sector concentration: Meta Platforms (9.6%), NVIDIA (8.1%), and Microsoft (7.7%). While the fund’s three-year return of 18.8% trailed pure semiconductor exposure, the five-year return of 17.3% demonstrates sustained performance. The 0.68% expense ratio keeps a larger share of returns with shareholders. Technology investors preferring broader sector exposure rather than concentration in semiconductors alone should evaluate this no-load alternative.

Defense and Aerospace: Geopolitical Hedge with FSDAX

The Fidelity Select Defense & Aerospace fund (FSDAX) invests in companies engaged in defense and aerospace research, manufacturing, and services. Clayton Pfannenstiel has guided the fund since December 2021, applying the same disciplined fundamental analysis that characterizes Fidelity’s approach.

As of February 2025, FSDAX’s major holdings included General Electric (20.9%), The Boeing Company (11.9%), and Raytheon Technologies (10%). The fund returned 17.8% over three years and 16.3% over five years. With current geopolitical tensions potentially supporting aerospace and defense spending, this no-load fund’s 0.65% expense ratio provides cost-efficient exposure to a potentially resilient sector. The fund’s stability and steady performance make it suitable for investors seeking a defensive portfolio component.

The Case for Acting Now

In a market environment characterized by economic uncertainty, tariff concerns, and mixed employment trends, controlling costs becomes paramount. No-load mutual funds remove the friction of sales charges while providing professional management and instant diversification. The four funds outlined above combine strong historical performance, reasonable expense ratios, and alignment with current market themes—from technology innovation to energy infrastructure to defense readiness. By eliminating load charges entirely, investors retain more capital working toward their goals, allowing compound growth to operate more effectively over time.