Best Mutual Funds To Invest In This Year

Mutual funds are a type of investment fund that pools money from many investors to purchase financial assets like stocks, bonds, real estate, and commodities. They are a popular investing tool for individuals and professionals seeking to beat the market or access a diverse range of investments. While some mutual funds are index funds, most are actively managed, with fund managers following strategies to buy and sell securities to outperform the market. With over 9,000 mutual funds holding more than $16 trillion in assets, investors have a wide range of options to choose from.

Top mutual funds for May 2024

Mutual funds are a great way to get exposure to a wide range of stocks, bonds, and other assets. Here are some of the top-performing mutual funds to consider for May 2024:

Fidelity 500 Index Fund (FXAIX)

FXAIX is a great option for investors seeking easy and inexpensive exposure to the S&P 500 index. With no minimum investment and a low expense ratio of 0.02%, it has delivered a strong annualized return of 10.7% since its inception in 1988. The fund provides diversification by investing in the 500 largest US companies across various sectors. However, keep in mind that index funds are not designed to beat the market.

Fidelity Large Cap Growth Index Fund (FSPGX)

FSPGX is a growth-oriented fund that tracks the Russell 1000 Growth index. With no minimum investment, it has delivered an impressive annualized return of nearly 17% since its inception in 2016. The fund provides exposure to some of the largest US companies, with its top 10 holdings making up about 50% of the fund. However, growth stocks can be riskier than other types of stocks.

Fidelity Investment Grade Bond Fund (FBNDX)

FBNDX is a bond fund that seeks to provide a higher level of current income by investing primarily in medium- and high-quality investment-grade debt securities. The fund has a strong team of experienced managers, and its performance has been impressive, outpacing 95% of its competitors in 2020, according to Morningstar. It offers a yield of 4.8% but can be volatile at times and has a relatively high expense ratio.

Vanguard Wellesley Income Fund Investor Shares (VWINX)

VWINX is a balanced fund that provides exposure to both stocks and bonds, aiming to provide steady income to investors. It has a strong track record, with income levels higher than its peers and lower volatility, according to Morningstar. However, it requires a minimum investment of $3,000, and its conservative allocation results in lower growth potential compared to an all-stock portfolio.

Schwab Fundamental US Large Company Index Fund (SFLNX)

SFLNX provides a simple and low-cost way to invest in some of the largest US companies, with no minimum investment. It is well-diversified across sectors like financials, technology, and healthcare. However, its strict rebalancing schedule can sometimes lead to premature selling of potential winning stocks. It also has a slightly higher expense ratio of 0.25% compared to other passively managed funds.

Schwab S&P 500 Index Fund (SWPPX)

SWPPX is another excellent option for investors seeking low-cost exposure to the S&P 500 index. With no minimum investment, it offers broad diversification and has a very low expense ratio, tied with FXAIX for the lowest on this list. However, it has fewer assets compared to FXAIX and only provides exposure to the largest US companies.

These mutual funds offer a mix of growth, income, and diversification potential, making them solid choices for investors in May 2024. Remember to consider your investment goals, risk tolerance, and conduct thorough research before investing.

Mutual funds for growth investors

Mutual funds are a popular investment tool for both individual and professional investors. They are a type of investment that pools money from many participants to buy a portfolio of stocks, bonds, and other securities.

Large-Growth Mutual Funds

Large-growth portfolios invest in large US companies that are projected to grow faster than other large-cap stocks. Here are some of the best large-growth mutual funds:

• BNY Mellon Large Cap Securities Fund
• Vontobel US Equity Institutional Fund
• AB Large Cap Growth Fund
• MFS Massachusetts Investors Gr Stk Fund
• Commerce Growth Fund
• Federated Hermes MDT Large Cap Growth Fund
• Fidelity Advisor® Series Equity Gr Fund
• Congress Large Cap Growth Fund

Growth Mutual Funds and ETFs

These growth stock mutual funds and ETFs have earned top ratings from Morningstar:

• Brown Capital Management Small Company (BCSIX)
• Champlain Mid Cap (CIPMX)
• Champlain Small Company (CIPSX)
• Fidelity Growth Company (FDGRX)
• Loomis Sayles Growth (LSGRX)
• Morgan Stanley Institutional Discovery (MPEGX)
• Morgan Stanley Institutional Growth (MSEQX)
• Nationwide Small Company Growth (NWSAX)
• Primecap Odyssey Aggressive Growth (POAGX)
• Primecap Odyssey Growth (POGRX)
• Principal Blue Chip (PGBHX)
• Principal MidCap (PMBPX)
• T. Rowe Price All-Cap Opportunities (PRWAX)
• T. Rowe Price Institutional Mid-Cap Equity Growth (PMEGX)
• T. Rowe Price Mid-Cap Growth (RPMGX)
• Vanguard Capital Opportunity (VHCOX)
• Vanguard Growth Index/ETF (VIGAX VUG)
• Vanguard Russell 1000 Growth Index/ETF (VRGWX VONG)
• Vanguard S&P 500 Growth Index/ETF (VSPGX VOOG)
• Vanguard S&P Mid-Cap 400 Growth (VMFGX)
• Vanguard Small Cap Growth Index/ETF (VSGAX VBK)
• Wasatch Core Growth (WGROX)
• Wasatch Small Cap Growth (WAAEX)

Top-Performing Mutual Funds

According to Forbes, these are the top-performing mutual funds as of October 2024:

• Fidelity International Index Fund (FSPSX)
• Fidelity U.S. Sustainability Index Fund (FITLX)
• Schwab S&P 500 Index Fund (SWPPX)
• Shelton Nasdaq-100 Index Fund Investor (NASDX)
• Schwab Fundamental US Large Company Index Fund (SFLNX)
• Fidelity Intermediate Municipal Income Fund (FLTMX)
• Dodge & Cox Income Fund (DODIX)
• Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)
• Schwab Fundamental US Small Company Index (SFSNX)
• T. Rowe Price Mid-Cap Growth Fund (RPMGX)

Mutual funds for bond investors

Mutual funds are a collection of investors' money that fund managers use to invest in stocks, bonds, and other securities. They are among the most popular investing tools for those seeking to beat the market or simply access a wide range of investments.

IShares Core U.S. Aggregate Bond ETF (AGG)

This fund seeks to provide broad exposure to the U.S. investment-grade bond market. Over 70% of the fund is invested in AAA-rated securities. Its 5-year annualized return is 0.36%, and its expense ratio is 0.03%.

Vanguard Total Bond Market ETF (BND)

The Vanguard Total Bond Market ETF aims to track the investment performance of a broad, market-weighted bond index. It provides exposure to the taxable investment-grade U.S. bond market, with about two-thirds of the portfolio invested in U.S. government bonds. Its 5-year annualized return is 0.40%, and its expense ratio is 0.03%.

Fidelity U.S. Bond Index Fund (FXNAX)

This fund aims to track the total return of the debt securities in the Bloomberg Barclays U.S. Aggregate Bond Index. Typically, the fund invests at least 80% of its assets in securities included in the index. Its 5-year annualized return is 0.38%, and its expense ratio is 0.025%.

Vanguard Short-Term Corporate Bond ETF (VCSH)

The Vanguard Short-Term Corporate Bond ETF mainly invests in high-quality investment-grade corporate bonds, aiming to provide current income with modest volatility. The fund maintains a dollar-weighted average maturity between one and five years. Its 5-year annualized return is 2.20%, and its expense ratio is 0.04%.

IShares Floating Rate Bond ETF (FLOT)

The iShares Floating Rate Bond ETF seeks to track the investment performance of an index of U.S. investment-grade floating-rate bonds with remaining maturities between one month and five years. Floating-rate bonds' interest payments adjust to changes in interest rates, making them attractive during periods of rising rates. Its 5-year annualized return is 2.91%, and its expense ratio is 0.15%.

Fidelity Investment Grade Bond Fund (FBNDX)

The Fidelity Investment Grade Bond Fund is an actively managed fund that aims to provide a high level of current income. The fund typically invests at least 80% of its assets in all types of investment-grade bonds. Its 5-year annualized return is 1.19%, and its expense ratio is 0.45%.

Schwab U.S. Aggregate Bond Index Fund (SWAGX)

The Schwab U.S. Aggregate Bond Index Fund aims to track the investment performance of an index composed of the total U.S. investment-grade bond market. It offers no investment minimums and low costs, making it a solid choice as a core bond holding in a diversified portfolio. Its 5-year annualized return is 0.30%, and its expense ratio is 0.04%.

Mutual funds for beginners

Mutual funds are a great way to invest in a diversified portfolio of securities for a relatively small minimum investment. They are ideal for investors who don't have the time or ability to choose stocks. Here are some tips for beginners looking to invest in mutual funds:

• Set clear investment goals: Before investing in mutual funds, it is important to have clear financial objectives, be aware of your risk tolerance, and consider your budget and time horizon. For instance, if you are investing for retirement 30 years in the future, you can opt for a more aggressive (stock-heavy) mutual fund. On the other hand, if you are investing to buy a yacht in five years, a more conservative fund would be a better choice.
• Choose the right type of mutual fund: There are different types of mutual funds, including stock funds, bond funds, balanced funds, and index funds. First-time investors often opt for balanced or debt funds due to their low risk and stable returns.
• Select a mutual fund from a shortlist: When looking to invest, analyse and evaluate the various mutual fund options available in each category. Consider factors such as the fund manager's qualifications, expense ratio, portfolio components, and assets under management.
• Diversify your portfolio: Invest in multiple mutual funds to diversify your portfolio. This way, if one mutual fund underperforms, the others can make up for the loss, keeping your portfolio's value stable.
• Use Systematic Investment Plans (SIPs): SIPs are a good way to enter the stock market for beginners. Spreading your assets over time and investing in multiple markets is generally better than making a large investment at the peak of the stock market. SIPs offer the advantage of rupee cost averaging, which lowers the cost of your investment and increases long-term profits.
• Keep your KYC papers current: In India, the Know Your Customer (KYC) procedure is mandatory for most financial transactions, including investing in mutual funds. As part of the KYC process, you will need a valid PAN card and address verification.
• Enroll for net banking: Net banking is required for all mutual fund purchases and is generally a safer and faster option than investing with debit cards and checks.
• Consider seeking expert advice: Investing in mutual funds involves a lot of work, and there are dozens of funds to choose from. If you need help deciding which mutual funds to invest in, consider hiring a mutual fund specialist or distributor.
• Balanced Funds: These funds offer a mix of equity and FD-like instruments, aiming to provide good returns at low risk.
• ELSS (Tax Saving) Schemes: ELSS schemes offer the dual benefit of saving tax and growing wealth. They have a minimum lock-in period of 3 years and are suitable for an investment horizon of 3 years or more.
• Fidelity Intermediate Municipal Income Fund (FLTMX): This fund focuses on bonds with a dollar-weighted average maturity between three and ten years, and at least 80% of its bonds are investment-grade. It has a yield of 2.57%, which is equivalent to a 3.836% taxable yield for married joint filing taxpayers in the 24% bracket.
• Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX): This fund is suitable for income investors as it promises both income and capital appreciation. It has an average effective duration of around 13 years, so if interest rates decline by one percent, you can expect about a 13% increase in the fund's value.
• Schwab Fundamental US Small Company Index (SFSNX): This fund is well-diversified, with its top 10 holdings contributing only 3% of the fund's value. It is suitable for investors seeking a fund that has beaten its Morningstar category averages over the past one, three, five, and ten years.

Remember to always do your research before investing in any mutual fund and make sure you understand the risks involved.

Mutual funds for long-term investors

Mutual funds are a great way to invest in the stock market without having to pick and choose individual stocks. They are a good option for investors who want to benefit from the market's high average annual returns without having to select and manage a portfolio of individual stocks.

Vanguard 500 Index Fund Admiral (VFIAX)

This fund has a 10-year annualized return of 13.8% and a dividend yield of 1.7%. It is the first mutual fund industry's index fund, offering broad-market exposure that makes it a central holding for core portfolios.

Vanguard U.S. Growth Fund Investor (VWUSX)

With a 10-year annualized return of 18.4% and a dividend yield of 0.2%, this fund is Vanguard's oldest growth fund. It is managed by multiple teams, including Jackson Square Partners, Wellington, Baillie Gifford Overseas, Jennison Associates, and Vanguard Quantitative Equity Group.

Fidelity Strategic Dividend & Income Fund (FSDIX)

FSDIX has a 10-year annualized return of 9.8% and a dividend yield of 2.1%. It is one of the best values in dividend investing, with expenses of just 0.71%, which is below the category average. The fund primarily focuses on dividend stocks, real estate-related securities, convertible securities, and preferred stocks.

Parnassus Mid-Cap Fund (PARMX)

PARMX has consistently outperformed its category peers and has a 10-year annualized return of 12.2% and a dividend yield of 0.49%. It focuses on stocks with "competitive advantages," "quality management teams," and environmental, social, and corporate governance (ESG) criteria.

Wasatch Micro Cap Fund Investor (WMICX)

WMICX is an excellent small-cap growth fund with a 10-year annualized return of 17.3% and a focus on health care, technology, and consumer discretionary stocks. While it has an above-average expense ratio of 1.66%, it is one of the few well-managed small-cap mutual funds open to investors, making it a good option for those seeking small-cap exposure.

T. Rowe Price Health Sciences Fund (PRHSX)

This fund provides exposure to a wide range of health care industries and has a 10-year annualized return of 20.3% and a dividend yield of 0.1%. It is one of the best mutual funds in the health care sector, outperforming 99% of its competition over the past 10 and 15 years.

Fidelity Select Software and IT Services Portfolio (FSCSX)

FSCSX is an actively managed fund in the technology sector with a 10-year annualized return of 21.4% and a dividend yield of 0.7%. It primarily invests in companies involved in software, data processing services, and IT consulting.

Fidelity International Capital Appreciation Fund (FIVFX)

FIVFX is a good option for investors seeking international exposure, with a focus on developed markets and some emerging markets. It has a 10-year annualized return of 9.9% and a dividend yield of 0.5%.

Vanguard Wellington Fund Investor (VWELX)

VWELX is Vanguard's oldest fund and the nation's oldest balanced fund, investing in both stocks and bonds. It has a 10-year annualized return of 9.7% and a low expense ratio of just 0.25%.

Fidelity Total Bond Fund (FTBFX)

For investors seeking broad bond exposure, FTBFX is a strong option with a 10-year annualized return of 4.4%. It primarily invests in investment-grade bonds, with a small portion in lower-quality, higher-yield debt.

When choosing mutual funds for the long term, it is important to consider your financial goals, risk tolerance, and investment horizon. Additionally, keep in mind that past performance does not guarantee future results, but it can give you an idea of the fund's historical returns and volatility.

Frequently asked questions