Best Investment Companies: Top 5 Mutual Fund Leaders

Mutual funds are a popular investment tool for those seeking to beat the market or simply access a wide range of investments. They are a way to own a share in a larger investment portfolio that is jointly owned by other investors. There are currently over 9,000 mutual funds that hold more than $16 trillion in assets.

When it comes to the top investment companies with mutual funds, here are 5 of the best:

1. Fidelity Investments: With nearly 3,400 no-transaction-fee mutual funds, Fidelity is a well-known name in the mutual fund space. They also offer four zero-fee funds, making them an attractive option for cost-conscious investors.

2. Charles Schwab: Known for pioneering low-cost investing, Charles Schwab provides a wide selection of no-load, no-transaction-fee mutual funds.

3. E-Trade: E-Trade offers over 6,000 no-load, no-transaction-fee mutual funds, providing a vast array of options for investors.

4. Ally Invest: With access to more than 17,000 mutual funds and no commissions on no-load funds, Ally Invest is a top choice for investors interested in a diverse range of mutual funds.

5. The Vanguard Group: This company is renowned for its low-cost index funds, offering over 3,000 no-transaction-fee mutual funds and 160 Vanguard mutual funds with no transaction fees.

These companies stand out for their extensive offerings, low fees, and strong reputations in the mutual fund space.

Top-performing mutual funds

When it comes to investing, there is no one-size-fits-all approach, and the same is true for mutual funds. The best mutual fund for an individual will depend on their investment objectives, risk tolerance, and investment horizon. Here is a look at some of the top-performing mutual funds to consider:

Vanguard and Fidelity are the two companies that dominate the domestic mutual fund market. They offer robust funds with high growth potential and have trillions in total assets under management. Here is a list of the five largest mutual funds by assets under management (as of February 28, 2021, unless otherwise noted):

• Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX): With over $1.3 trillion in assets under management, this fund provides exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. It has a low expense ratio of 0.04% and has delivered strong performance, with a 1-year return of 11.67% and a 3-year annualized return of 17.46% as of March 31, 2022. The minimum initial investment requirement is $3,000.
• Vanguard 500 Index Fund Admiral Shares (VFIAX): This fund mirrors the S&P 500 index and offers exposure to 500 of the largest U.S. companies across various industries. It has $808.8 billion in assets under management and an expense ratio of 0.04%. As of March 31, 2022, it had a 1-year return of 15.60% and a 3-year annualized return of 18.89%. The minimum investment requirement is $3,000.
• Vanguard Total International Stock Index Fund Admiral Shares (VTIAX): With $385.5 billion in assets under management, this fund tracks the performance of various indexes containing stocks from developed and emerging markets, excluding the U.S. It has an expense ratio of 0.11% and has delivered a 1-year return of -1.85% and a 3-year annualized return of 7.76% as of March 31, 2022. The minimum investment requirement is $3,000.
• Fidelity 500 Index Fund (FXAIX): This large-blend fund tracks the S&P 500 and has $399 billion in assets under management as of March 31, 2022. It has an extremely low expense ratio of 0.015% and a solid 5-star Morningstar rating. As of March 31, 2022, it had a 1-year return of 15.63% and a 3-year annualized return of 18.91%.
• Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX): This fund provides investors with exposure to U.S. investment-grade bonds, including U.S. Treasuries and mortgage-backed securities. It has $305.1 billion in assets under management and an expense ratio of 0.05%. As of March 31, 2022, it had a 1-year return of -4.09% and a 3-year annualized return of 1.69%. The minimum investment requirement is $3,000.

In addition to the above, here are some other notable mutual funds that have been ranked highly or have delivered strong performance:

• T. Rowe Price U.S. Equity Research Fund (PRCOX): Ranked highly by U.S. News.
• Fidelity International Index Fund (FSPSX): Ranked highly by Forbes, with a focus on low fees and international stocks.
• Schwab S&P 500 Index Fund (SWPPX): Ranked highly by Forbes, with a low fee and broad market performance.
• Shelton Nasdaq-100 Index Investor Fund (NASDX): Ranked highly by Forbes, with strong performance over the past decade.
• ICICI Prudential Infrastructure Fund: Ranked highly by ET Money, with returns of over 32% and 300% over 1 and 3 years, respectively.
• Nippon India Small Cap Fund: Ranked highly by ET Money, with returns of over 37% and 380% over 1 and 3 years, respectively.
• Fidelity Intermediate Municipal Income Fund (FLTMX): Ranked highly by Forbes, with a focus on intermediate-term bonds and tax efficiency.
• Dodge & Cox Income Fund (DODIX): Ranked highly by Forbes, with a long track record and an emphasis on active management.

Best mutual funds for beginners

Mutual funds are a great way to invest, especially for beginners. They are an investment platform that pools money from many participants to buy a portfolio of stocks, bonds, and other securities. The fund then sells shares to investors, with each share representing an equity ownership stake in the mutual fund and the income it generates.

Balanced Funds

Balanced funds, also known as hybrid funds, offer a mix of equity and fixed-deposit-like instruments, aiming to provide good returns at low risk. They are suitable for those with an investment horizon of three years or more. Some top-performing balanced funds include:

• Motilal Oswal ELSS Tax Saver Fund
• DSP ELSS Tax Saver Fund
• ICICI Prudential Equity & Debt Fund
• Kotak ELSS Tax Saver Fund
• Invesco India ELSS Tax Saver Fund
• Mirae Asset ELSS Tax Saver Fund

Equity-Linked Savings Schemes (ELSS)

ELSS are special mutual funds that provide tax benefits under Section 80C of the Income Tax Act. They have a lock-in period of three years, which is lower than most other tax-saving investment options. Some top-performing ELSS funds include:

• Edelweiss Aggressive Hybrid Fund
• Canara Robeco ELSS Tax Saver
• Baroda BNP Paribas Aggressive Hybrid Fund
• Sundaram Aggressive Hybrid Fund
• Mirae Asset Aggressive Hybrid Fund
• Canara Robeco Equity Hybrid Fund
• Aditya Birla Sun Life ELSS Tax Saver Fund
• Axis ELSS Tax Saver Fund

Large Investment Companies with Mutual Funds

When choosing a mutual fund to invest in, it is essential to consider the investment company managing the fund. Here are the top five investment companies with mutual funds:

• Fidelity Investments
• American Century Investments
• Dimensional Fund Advisors
• Franklin Templeton Investments
• Guggenheim Investments

Other Things to Consider

When investing in mutual funds, it is important to keep the following in mind:

• Investment goals: Consider whether you are investing for retirement, capital gains, or income generation.
• Risk tolerance: Determine how much risk you are willing to take.
• Diversification: Mutual funds offer instant diversification, but ensure the fund is not over-diversified, as it can dilute profits.
• Fund performance: Check the fund's historical performance, but remember that past performance does not guarantee future results.
• Fees and expenses: Mutual funds have various fees, such as expense ratios, sales loads, and redemption fees. Choose funds with low fees to maximize returns.
• Tax implications: Understand the tax consequences of investing in mutual funds, as gains may be taxed as capital gains or ordinary income.

Mutual funds for long-term goals

Mutual funds are a great way to invest for long-term goals. Here are some tips for investing in mutual funds for the long term:

• Identify your goals: Before investing in mutual funds, it is important to identify your financial goals. Ask yourself whether you are investing for retirement, saving for your child's education, or some other long-term goal. Each goal will have different time horizons and risk tolerances, which will impact the types of mutual funds you should consider.
• Understand your risk tolerance: The next step is to assess your risk tolerance. Are you comfortable with a higher-risk investment that offers the potential for greater returns, or do you prefer a more conservative approach? Your risk tolerance will help you determine the types of mutual funds and specific investments within those funds that align with your comfort level.
• Consider the time horizon: Long-term goals typically have a time horizon of ten or more years. This longer time frame allows you to invest in the stock market and ride out any short-term fluctuations. It's important to remember that while the stock market has historically trended upward, there can be downturns along the way.
• Choose the right type of fund: When investing for the long term, you should focus on growth and capital appreciation. Equity mutual funds are a good option for long-term goals as they aim for wealth creation and have the potential to generate higher returns over time. Within equity funds, you can choose between large-cap, mid-cap, and small-cap funds based on your risk tolerance. Large-cap funds invest in well-established companies and are considered less risky, while small-cap funds invest in smaller, newer companies and carry more risk.
• Look for consistent performance: When evaluating mutual funds, it's important to consider their track record. Look for funds that have consistently outperformed their peers and benchmark over three to five years. Check the fund's performance during market downturns to see how it handles volatile conditions.
• Consider fees: Mutual funds charge various fees that can impact your returns. Compare the expense ratios of different funds, as higher fees will eat into your investment gains. Also, be mindful of sales charges or load fees, which can be front-end or back-end loaded. No-load funds don't charge a load fee, but they may have higher management expense ratios.
• Evaluate fund managers: The fund manager plays a crucial role in the success of a mutual fund. Review the track record of the fund manager and their performance during market ups and downs. Consider the manager's investment strategy, their longevity, and their ability to deliver results consistent with the market.
• Diversify your investments: Diversification is a key advantage of mutual funds. They allow you to invest in a basket of securities, reducing the impact of any single investment's poor performance. Diversification helps to mitigate risk and smooth out portfolio returns.
• Invest regularly: Consider investing in mutual funds through a Systematic Investment Plan (SIP). This allows you to invest a fixed amount regularly, such as monthly, quarterly, or yearly. SIP helps you benefit from rupee-cost averaging and makes it easier to invest towards your long-term goals.

• Fidelity Investments
• American Century Investments
• Dimensional Fund Advisors
• Franklin Templeton Investments
• Guggenheim Investments

Mutual funds for short-term goals

When considering mutual funds for short-term goals, it is important to understand the nature of short-term mutual funds and the various options available. Short-term mutual funds typically hold stocks for a year or less and have low turnover rates, minimising transaction costs. They also tend to avoid illiquid assets, like real estate, which can be difficult to sell quickly.

Liquid Funds

Liquid funds are a popular choice for short-term investments, offering high liquidity, low risk, and competitive returns. These funds invest in short-term debt instruments, such as government and corporate bonds, with a maturity period of around a year or less. They are ideal for investors who want to park their money for short periods without locking into long-term commitments.

Ultra-Short-Term Funds

Ultra-short-term funds are similar to liquid funds but are held for less than 90 days. They invest in debt instruments with an average maturity of less than a year and offer slightly higher returns than liquid funds, although they are also less liquid and carry a higher risk.

Short-Term Funds

Short-term funds have become a preferred option for investors due to their convenience and potential for solid returns. These funds are suitable for those with short-term financial goals or those who want to maintain liquidity. They are an attractive option during volatile market periods as they allow for quick gains while minimising risk.

Specific Mutual Fund Recommendations

When considering specific mutual funds for short-term investments, here are some options to explore:

• Franklin India Short-Term Income Plan - Direct Plan-Growth
• Edelweiss Banking and PSU Debt Fund - Direct Plan-Growth
• Nippon India Short-Term Fund - Growth
• IDFC Bond Fund - Short-Term Plan Regular Plan-Growth
• Aditya Birla Sun Life Money Manager Fund - Direct Plan-Growth
• Sahara Liquid Fund Variable Pricing Direct-Growth option
• Quant Active Fund Growth

Factors to Consider

When investing in mutual funds for short-term goals, it is crucial to assess various factors, including return on investment (ROI), risk tolerance, liquidity, taxes, and inflation rates. Understanding your investor profile and risk appetite is essential before making any investment decisions.

Mutual funds with low expense ratios

When it comes to investing in mutual funds, the expense ratio is a critical factor that can significantly impact long-term returns. While the expense ratio is undoubtedly an important metric, investors should also consider factors such as the fund's track record, investment strategy, level of diversification, and how well it aligns with their overall financial objectives and risk appetite.

• Fidelity Investments: Fidelity International Index Fund (FSPSX) has a low expense ratio, allowing it to outperform its rivals. The fund focuses on mid- and large-cap companies from 21 international markets, excluding the US and Canada.
• Vanguard: Vanguard is known for its low fees, and its Long-Term Investment-Grade Fund Investor Shares (VWESX) is a great example. This fund has an expense ratio of around 0.41%, which is slightly better than the average for actively managed bond mutual funds.
• Schwab: Schwab S&P 500 Index Fund (SWPPX) offers exposure to most of the 500 largest US companies for a low fee. With an expense ratio of 0.02%, it is an excellent choice for investors seeking wide diversification at a low cost.
• T. Rowe Price: The T. Rowe Price Mid-Cap Growth Fund (RPMGX) has outperformed its mid-cap growth category over the past three, ten, and fifteen years. With a low annual turnover rate of around 21%, it can be considered a "conservative" growth offering.
• Aditya Birla Sun Life Mutual Fund: Aditya Birla SL Inv Inc-QS I is a debt fund with an expense ratio of 0.02%, implying better returns over the long term. With a 3-year CAGR of 6.15%, this fund has generated better returns than other funds in the same category.

Additionally, here are some other notable mentions of mutual funds with low expense ratios:

• Shelton Nasdaq-100 Index Fund Investor (NASDX)
• Dodge & Cox Income Fund (DODIX)
• Nippon India Inv-Mthly-I (Debt - Interval Fund)
• Mirae Asset Equity Allocator FoF (FoFs - Domestic - Equity Oriented)

Frequently asked questions