The best no-load mutual fund companies are the ones that have a diverse selection of low-cost, no-load funds. This translates to the companies that offer the best mutual funds with low expense ratios and with no commissions, sales charges, or hidden costs, such as 12b-1 fees. These mutual funds make investing easy, inexpensive, and profitable.
With that said, this list of no-load fund families was not created with a scientific method, such as a point system for certain quantitative aspects, but rather a qualitative, knowledge-based perspective that comes from years of experience. For full disclosure, I've used mutual funds from all of the following fund families, either for personal use or for recommendations to clients, or both.
- Vanguard offers low-cost funds that emphasize passive index investing.
- Fidelity is one of the largest financial corporations in the world, and while some of its funds are loaded, it also has a wide range of no-load mutual funds and ETFs.
- T. Rowe Price has built a name for itself in the past century as a reliable name for growth investors.
- Charles Schwab is a good option for people who want a simplified, all-in-one discount broker.
Vanguard Group, Inc: The Low-Cost Index Master
You can't get any more simple, low-cost, and diverse than Vanguard. This investor-owned mutual fund family grew popular among the do-it-yourself (DIY) crowd with their affection and admiration for founder John C. "Jack" Bogle's style of common sense investing.
The late Bogle's investment philosophy aligns with the Efficient Markets Hypothesis (EMH), which essentially says that all known information about investment securities, such as stocks, is already factored into the prices of those securities. Therefore, no amount of analysis can give an investor an edge over other investors.
Bogle might say, "If you can't beat the market, join it." Taking this philosophy a step further, Bogle effectively illustrates to his followers, known as "Bogleheads," and to the world investment community that the costs involved with trading securities erode returns, especially over long periods of time.
Vanguard's oldest fund is the Wellington Fund (VWELX) and its best-known fund is the Vanguard 500 Index (VFINX), which is an index fund that mirrors the movements of (and securities found within) the S&P 500 Index. New investors can buy Admiral Shares in the Vanguard 500 Index fund, trading as VFIAX.
If you are the type of investor who does not want to spend time analyzing mutual funds and you believe that passively-managed index funds and exchange-traded funds (ETFs) are the best tools to build a portfolio of mutual funds, Vanguard is the only mutual fund company you need.
Fidelity Investments: The Big Retirement Services Company
Fidelity Investments is best known as a mutual fund company and provider of retirement services and products, such as 401(k) plans and IRAs, for businesses and individuals. Fidelity, founded in 1946, is one of the largest multinational financial services corporations in the world.
There is nothing wrong with being large. However, some funds can attract such a large amount of assets that they are no longer able to navigate markets and effectively outperform indexes like they may have done in the past. Think of Fidelity's Magellan Fund (FMAGX).
The now-legendary fund manager, Peter Lynch, did so well at picking stocks during the 1980s that it became the largest fund in the world (the fund grew from $18 million in assets to $14 billion during Lynch's tenure). Since that time, Magellan has struggled. Fortunately, Fidelity has another popular and strong performer in Fidelity Contrafund (FCNTX), managed by the highly-respected Will Danoff.
Fidelity deserves praise for having a wider variety of choices than most fund families. They have a broad selection of index funds and ETFs that compete with Vanguard's and they have a large selection of actively managed funds that represent all major fund categories as well as sector funds.
It should be noted that not all of Fidelity's funds are no-load. They also have advisor shares and loaded funds.
T. Rowe Price: Solid Alternative to the Giants
Thomas Rowe Price, Jr founded his investment firm in 1937 based upon his growth stock philosophy of investing, which focuses on stocks of companies that are expected to grow at a rate faster in relation to the overall stock market.
T. Rowe Price is a favorite among the do-it-yourself crowd for the investment firm's broad selection of quality no-load mutual funds, including their flagship fund, and the one with the highest amount of total assets, T. Rowe Price Growth Stock Fund (PRGFX). T. Rowe Price also has some of the best S&P 500 index funds as well as a diverse selection of other no-load funds, including standout T. Rowe Price Health Sciences (PRHSX), one of the best performing sector funds in the mutual fund universe.
Charles Schwab: Discount Broker, All-in-One Fund Company
You can easily open a brokerage account at Vanguard or Fidelity, where you can choose from thousands of mutual funds, even those from competing mutual fund companies. However, Charles Schwab may be the best overall discount broker that offers the complete package of mutual funds, stocks, bonds, and services to investment traders all in one place. As the popular ad campaign suggests, "Need help? Talk to Chuck!"
Founded in 1971 under the name First Commander Corporation, Schwab began offering brokerage services to individuals at a discount in 1975. Before that time, investing in the stock market was considered primarily a wealthy person's privilege.
How to Research and Find the Best No-Load Funds
Mutual fund research can be made easier with a good online research tool. Whether you are a beginner or a pro and if you are looking to buy the best no-load mutual funds, review an existing fund, compare and screen different funds, or just trying to learn something new, mutual fund research sites, such as Morningstar, can be helpful and easy to use.
Search "screens" on their online tools allow for an investor to narrow their search for no-load and load-waived funds. Most of the online mutual fund research sites require you to register for "free" or "premium" access.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.