In a complicated investing world where every friend, neighbor, and relative seems to have a tip that they swear by, it can be intimidating to find an investment that suits your own personal needs and financial goals. To provide some guidance, we have chosen 10 mutual funds that are the best of their class in 2017. Just remember that ‘best’ is a relative term. To that point, the right investments for you aren’t always going to be the best performing mutual funds. Instead, the best mutual funds for your portfolio will be the investments that are most suited to your needs, temperament and risk tolerance.
In choosing the 10 funds, we isolated the most popular asset classes and looked for the best mutual funds to buy in each. As you will see, we’ve included both domestic and international equity funds ranging from large cap to small cap, growth to value. Similarly, we looked for fixed income funds that concentrate on everything from investment-grade bonds to the higher yielding but riskier grades. In judging the individual funds, we looked at costs, performance, volatility measures and some intangibles to find the best mutual funds in the different categories. While no fund is perfect, these 10 are very good at what they’re intended to do.
1. Vanguard Total Stock Market Index Fund (VTSMX)
Vanguard is a company renowned for its extraordinary efficiency and simplicity. With the best Vanguard mutual funds, you can always expect exceptionally low fees and a straight-forward approach. They are best known for their passive funds that invest in total markets rather than active management and the higher associated costs. The
The Vanguard Total Stock Market Index is suitable for an investor not afraid of risk. Or for one who wants to capture as much of the domestic markets as possible without having to buy countless different positions. This fund encompasses the entirety of the US equity markets, growth, and value, large-cap to micro-cap and everything in between.
2. Fidelity Contrafund (FCNTX)
Mutual funds with superior track records that span decades are relatively rare. However, this is a perfect description for Fidelity’s Contrafund. A stalwart in portfolios and retirement accounts the world over, Contrafund is always near the top of the best Fidelity mutual funds. In fact, it’s usually near the top of any best mutual funds list, period. Contrafund is an actively managed fund that looks for both growth and value in domestic large-cap stocks. It regularly beats the S&P 500.
3. MFS Total Return Fund (MSFRX)
For investors looking for a moderately aggressive approach to their portfolio but also crave the simplicity of a single position, the MFS Total Return fund is tough to beat. It has an allocation that slides between 50% and 70% equities depending on market conditions. Total Return focuses on finding value for the investor while also hedging risk with fixed income holdings.
4. Vanguard Target Retirement Funds
Similar to the balanced approach used by MFS Total Return, some investors are not only looking for an individual fund that will spread their money across all of the pertinent asset classes. They also want that fund to shed risk as they get closer to retirement.
While most fund families have target date funds of some sort, the Vanguard Target Retirement Funds really rise to the top with their low costs, well-allocated group of underlying funds and overall efficiency. It has unique investment mixes for investors between 18 and 73. They comprise the best performing mutual funds within Vanguard. This ‘fund of funds’ approach has a retirement solution for any investor, no matter their age.
5. American Funds New World F1 (NWFFX)
History tells us that the domestic markets are traditionally the most stable. It also tells us that diversifying our assets across borders provides our portfolios some much-needed octane for long-term growth. Given the intertwined nature of the global economy, this need for foreign stocks has never been greater. The
The American Funds New World fund takes a unique approach to international investing, dividing its assets between high volatility emerging markets and large, multinational corporations. The resulting mix is a nice blend of well-appointed risk and dividend-yielding conglomerates. It wants to satisfy the need for foreign assets in any portfolio.
6. T. Rowe Price Dividend Growth (PRDGX)
New, sophisticated investment strategies come and go. Still, there are a handful of techniques that are timeless in their effectiveness. It doesn’t matter how intricate the investing world becomes. Relying on dividend-paying stocks will always be an effective way to provide your assets some consistent, stable income while enjoying the long-term appreciation of the underlying stocks.
The T. Rowe Price Dividend Growth fund excels at this strategy. It invests 65% of its assets in dividend-paying companies. It keeps costs significantly lower than the class average, routinely making it one of the best dividend mutual funds in the market.
Investing isn’t just about the long-term growth of the stock market. A true investor is constantly hedging risk within their portfolio to dampen volatility. The most common way for an ordinary investor to accomplish such a task is this. Use an appropriate amount of fixed income positions, or bonds, within their accounts. With the
With the Vanguard Short-Term Investment Grade Investor fund, your portfolio can enjoy the low-cost approach that has become Vanguard’s signature while still holding diversified positions across different short-term bond sectors. By keeping the average maturities below 3 years, the fund is also nimble enough to react to inevitable interest rate hikes in the future.
8. Eaton Vance High Income Opportunities (ETHIX)
The bond market is dwarfing the equity markets in both size and scope. Therefore, it’s safe to assume that there are many different fixed income sectors available for your portfolio. High yield bonds have gotten a bad reputation for mismanaged assets and significant risk in the last 2 decades. Still, much of that is unwarranted. High yield bonds have a place in everyone’s asset allocation, just at appropriate measures.
The Eaton Vance High Income Opportunities fund has lower than average costs, higher yielding performance with a fair amount of capital appreciation as well. It’s a good position to own in such a suppressed interest rate environment.
9. Fidelity Real Estate Investment Portfolio (FRESX)
Do you want tangible assets somewhere in the portfolio but are afraid of the ill-liquid nature of real estate? The Fidelity Real Estate Investment Portfolio is a convenient way to integrate the benefits of property ownership while preserving the liquid nature of a mutual fund. It’s consistently one of the best-performing mutual funds in the real estate sector of the market.
Very much like real estate, some investors want commodities in their allocation to seek contrarian movement relative to the equity markets. This is another great way to curb risk through greater diversification. The BlackRock Commodity Strategies Portfolio is one of the best mutual funds to invest in. That is if you want to own commodities in a convenient fashion. And, also, to use it as an additional hedge against market risk.
None of these funds will magically make your portfolio outperform the market every year for the rest of your life. Still, each individual fund is one of the best mutual funds in its respective category. Therefore, it would be a fine addition to anyone’s portfolio if used appropriately. Be sure to share your own thoughts and experiences on which mutual funds you like best in 2017.