No-Load Funds Excel In Q1: 5 Top Performers

|
Includes: BGEIX, BULIX, FGADX, FSAGX, OGMYX, PMPIX, RYMNX
by: Zacks Funds

After a dream run last year, no-load mutual funds continued to offer healthy returns in the first quarter of 2016. While U.S.-based mutual funds registered significant outflows for most of the quarter primarily led by a massive slump in the major benchmarks, healthy returns indicate that no-load mutual funds attracted enough investor attention. Despite the early slump, the markets made a remarkable rebound during the latter half of the first quarter, which helped no-load mutual funds to eventually come up with solid returns.

The lower expense advantage of no-load funds over load funds played an important role in boosting their demand. It will be interesting to find out the top performers from this category during the first quarter. But before that, let's take a look at the performance of the no-load fund category during the period.

Q1 Performance

The top 100 funds out of the 10,714 no-load funds we studied, registered an average return of 25.9% last quarter compared to the top 100 load funds' average return of 16.2%. Meanwhile, top no-load fund ProFunds Precious Metals UltraSector Investor's (MUTF:PMPIX) gains of 82.1% also came significantly higher than the return of 49.9% from Rydex Precious Metals A's (MUTF:RYMNX), which was the top performing mutual fund among those that carry sales load.

The top performing no-load fund list for the first quarter is dominated by precious metal and utility funds. A massive crash witnessed earlier this year following weak global growth and a plunge in oil prices, boosted demand for securities related to the safe-haven sectors like gold and utilities.

Separately, the strong average return of the top 100 no-load funds came in higher than most of the top performing mutual fund categories in the first quarter. Apart from the equity precious metals category, which gained 40.7% in the quarter, strong returns of the top 100 no-load funds easily beat all the broader mutual fund categories. The second-best utility category of the quarter gained 11.4%.

While no-load mutual funds succeeded in providing healthy returns during the first quarter, the category also outperformed its load counterparts last year. The top performing 100 no-load mutual funds posted an average return of 16.74% in 2015 compared with the top 100 load funds' average return of 11.05%. Also, the category managed to finish in the positive territory in the third quarter of 2015, which was the worst quarter in four years.

Top Performing No-Load Mutual Funds

In this segment, we have highlighted five top performing no-load mutual funds of the first quarter that carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). These funds also have minimum initial investment within $5000, expense ratios below 1% and net assets over $50 million.

Banking on these fundamentals, 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.

Franklin Gold and Precious Metals Advisor (MUTF:FGADX) invests the lion's share of its assets in securities of companies involved in operations related to gold and precious metals.

The fund carries a Zacks Mutual Fund Rank #2 and returned 45.5% during the first quarter. Annual expense ratio of 0.84% is lower than the category average of 1.44%.

American Century Global Gold Investor (MUTF:BGEIX) invests in securities of global companies whose operations are related to gold or other precious metals.

The product carries a Zacks Mutual Fund Rank #2 and returned 43.5% during the first quarter. Annual expense ratio of 0.67% is lower than the category average of 1.44%.

Fidelity Select Gold (MUTF:FSAGX) invests heavily in companies whose principal operations are related to gold as well as in bullion or coins.

The fund carries a Zacks Mutual Fund Rank #1 and returned 41% during the first quarter. Annual expense ratio of 0.90% is lower than the category average of 1.44%.

Oppenheimer Gold & Special Minerals Y (MUTF:OGMYX) invests mainly in common stocks of companies that are involved in mining, processing or dealing with gold.

The product carries a Zacks Mutual Fund Rank #2 and returned 36% during the first quarter. Annual expense ratio of 0.92% is lower than the category average of 1.44%.

American Century Utilities Investor (MUTF:BULIX) uses qualitative and quantitative management techniques to invest a major portion of its assets in equities related to the utility industry.

The fund carries a Zacks Mutual Fund Rank #1 and returned 16.7% during the first quarter. Annual expense ratio of 0.67% is lower than the category average of 1.25%.

Original Post