Mutual funds may seem old fashioned in the age of trading Bitcoin (BTC) on your smartphone. But these pool investments are still popular, and for good reason. Namely, the best mutual funds can still deliver decent performance while offering a level of diversification that’s hard to come by when building your own portfolio.
The following nine options all offer various ways to invest, without breaking the bank on costs or investment minimums. And as the best mutual funds should, they offer diversification along with a tactical approach so you won’t find yourself suffering from short-term volatility as you plot a strategy to long-term success. Without further adieu, here are nine mutual funds to consider buying now:
|Mutual Fund||Assets||Expense ratio||Minimum investment|
|Vanguard Total Stock Market Index Fund Admiral Shares (ticker: VTSAX)||$297 billion||0.04%||$3,000|
|Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX)||$13 billion||0.08%||$3,000|
|Janus Henderson Global Equity Income Fund (HFQDX)||$6.4 billion||0.95%||$2,500|
|Fidelity Large Cap Growth Enhanced Index Fund (FLGEX)||$2.2 billion||0.39%||none|
|Fidelity Select Health Care Portfolio (FSPHX)||$8.6 billion||0.69%||none|
|Vanguard Total World Stock Index Fund Admiral Shares (VTWAX)||$5.4 billion||0.10%||$3,000|
|PIMCO Total Return (PTTAX)||$56 billion||0.8%||$1,000|
|The Hartford Short Duration Fund (HSDIX)||$1.9 billion||0.49%||$2,000|
|T. Rowe Price Capital Appreciation Fund (PRWCX)||$49 billion||0.72%||$2,500|
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
The Vanguard Total Stock Market mutual fund is exactly what it sounds like: a simple one-stop option for exposure to the entire U.S. stock market. There are nearly 4,000 different stocks that make up this product, representing all sectors of the domestic marketplace and all sizes of companies. Of course, not all those companies are represented equally: Trillion-dollar tech giants Apple Inc. (AAPL) and Microsoft Corp. (MSFT) represent about 12% of the entire fund between the two of them. But if you want a bit of all that Wall Street has to offer, this mammoth $297 billion fund is a great place to start. It costs a 0.04% expense ratio, which works out to $4 annually on a $10,000 investment.
Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX)
This Vanguard dividend-focused fund holds more than 300 stocks with an emphasis on dividend payers like Big Oil titan Exxon Mobil Corp. (XOM), health insurance giant UnitedHeath Group Inc. (UNH), Microsoft and financial sector icon JPMorgan Chase & Co. (JPM), to name a few. These are all rock-solid companies with staying power, in addition to paying a steady and growing dividend to their investors. If you’re looking for a bit more stability in your stock market exposure, this top mutual fund with a 30-day SEC yield of about 2% at present is worth a look.
Janus Henderson Global Equity Income Fund (HFQDX)
Of course, bigger doesn’t always mean better. While this Janus Henderson fund has a fraction of the total assets that bigger mutual funds have, it also delivers 4x to 5x the income, with a trailing 12-month yield of about 7.9% at present. That’s because this dividend-focused mutual fund invests only in the top payers globally, with a list of less than 80 total stocks that includes European consumer giant Unilever PLC (UL) and Japanese semiconductor firm Tokyo Electron Ltd. (TOELY), among others. You won’t find the typical U.S. large-cap stocks here – but what you will find is even bigger dividends.
Fidelity Large Cap Growth Enhanced Index Fund (FLGEX)
The flip side of value-oriented dividend stocks is this growth-oriented Fidelity fund. The portfolio is “enhanced,” meaning it looks beyond the typical indexes via computer-aided, quantitative analysis to select stocks that it thinks have the greatest potential to provide a higher total return in the long run. Right now, the 160 or so companies on board here include tech staples like Microsoft and Tesla Inc. (TSLA), but also travel portal Booking Holdings Inc. (BKNG) and warehouse retailer Costco Wholesale Corp. (COST). If you’re confident that brighter days are ahead and recent momentum in stocks will continue, FLGEX is a good growth-focused mutual fund.
Fidelity Select Health Care Portfolio (FSPHX)
Believe it or not, you can get sector-specific exposure via mutual funds instead of just general or broad-based strategies. And one sector in particular that has proven its strength time and time again is health care. After all, the one thing that is almost certain in life is that we all get sick and old, and we all need drugs and medical care. Fidelity Select Health Care Portfolio may be a bit more volatile than the broader funds on this list, but it’s still a great long-term bet on this trend. The roughly 100 stocks that make up this top mutual fund include insurance giant UnitedHealth Group, Big Pharma mainstay Eli Lilly & Co. (LLY) and medical device giant Boston Scientific Corp. (BSX), to name a few.
Vanguard Total World Stock Index Fund Admiral Shares (VTWAX)
Can’t decide between these flavors? Well, the Vanguard Total World fund mashes the entirety of the global stock market together so you don’t have to. It comprises about 10,000 publicly traded companies to ensure that if a stock is legitimate and listed on an exchange, it’s probably on this list. About 59% of the portfolio is in U.S. corporations you know and love like Apple, but Japan commands 6% or so of the portfolio, followed by just over 4% for the U.K. and over 3% for China. Considering the interconnected nature of the global economy, this is perhaps your best way to play a general confidence in publicly traded equities – and gain exposure to far-flung stocks that may not be feasible for you to scoop up on your own.
PIMCO Total Return (PTTAX)
An icon of the investing world, PIMCO Total Return is among the most respected fixed-income mutual funds out there. In operation since 1987 with a strong history of long-term outperformance, this actively managed bond offering has long been synonymous with bond investing worldwide. Since inception, it has averaged about 5.8% annually – a great feat, particularly considering that lifespan crosses an extended period of near-zero interest rates worldwide. Total Return invests mostly in intermediate-term, investment-grade bonds. But it also makes tactical decisions to invest in below-investment-grade bonds, emerging-market issuances and other assets in pursuit of higher yield without too much more risk. The result is a 30-day SEC yield of 4.2% right now.
The Hartford Short Duration Fund (HSDIX)
In times of uncertainty, many investors take shelter in short-duration bonds that offer a bit of income and a bundle of security. After all, it’s unlikely that a top-rated company will collapse in the next 10 months, but who knows where it will be in 10 years. This mutual fund from Hartford is actively managed in a way that provides above-average yield for income-oriented investors, with a 30-day SEC yield of about 4.8% at present and an average duration of just two years. Additionally, the portfolio holds roughly 840 bonds for diversification, with U.S. Treasury notes representing the biggest single area. You may not be able to double your money quickly in an investment like HSDIX, but it’s one of the best mutual funds if you want to be conservative and defensive with your money.
T. Rowe Price Capital Appreciation Fund (PRWCX)
Of course, very few investors should be all-in on bonds and nothing else – just as very few investors should be all-in on stocks and nothing else. That means most of us are stuck balancing that mix of assets on our own. T. Rowe Price takes some guesswork out of the equation for hands-off investors with this “asset allocation” fund that holds a mix of various vehicles so you don’t have to manage multiple positions. Right now, about 63% of PRWCX is in big U.S. stocks, with a modest 1.6% invested in international stocks. It then has about 30% in various bond instruments, and about 5% in cash. This mix obviously isn’t perfect for some investors, but if it’s close enough – and if you don’t mind a “one-size-fits-all” approach for the peace of mind that comes with automatic asset allocation, this may be the best mutual fund for you.
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