Best Usaa Mutual Funds: Where To Invest?

USAA is a well-known name in the financial industry, offering a wide range of products from insurance to investment advice. The company offers a full line of stock and bond mutual funds, some of which are better than others. When considering which USAA mutual fund to invest in, it's important to keep in mind factors such as fees, fund type, and performance. Here are some of the best USAA mutual funds available today:

1. USAA S&P 500 Index Fund Reward Shares (USPRX)

2. USAA Growth and Tax Strategy Fund (USBLX)

3. USAA Extended Market Index Fund (USMIX)

These funds offer a mix of benefits, such as tracking the performance of the S&P 500 index, investing in a combination of stocks and municipal bonds, and providing exposure to stocks that aren't included in the S&P 500 index. It's important to note that USAA's banking and investment products are only available to current and former members of the U.S. military and their families.

USAA S&P 500 Index Fund Reward Shares

USAA is well known for its banking services and insurance, but it also offers a wide range of stock and bond mutual funds. One of the best USAA mutual funds available today is the USAA S&P 500 Index Fund Reward Shares.

The USAA S&P 500 Index Fund Reward Shares (USPRX) is a mutual fund that tracks the performance of the S&P 500 index. The S&P 500 index is made up of about 500 American-listed stocks that represent approximately 80% of companies by market value. By investing in this fund, you essentially get the return of the market minus a slight drag for fees. Historically, this has proven to be a better strategy than actively picking stocks, as actively managed funds carry higher fees and need to perform significantly better than average just to give their investors average post-fee results.

The USAA S&P 500 Index Fund comes in two forms: Reward Shares and the alternative class. The Reward Shares have a lower annual expense ratio of just 0.16% compared to 0.25% for the alternative class. This makes it a more cost-effective option for investors. The fund had a price of $62.33 as of August 12, 2024, and its total net assets were $6.735 billion.

The advantage of investing in the USAA S&P 500 Index Fund Reward Shares is that it provides broad diversification across large-cap US stocks. By investing in this fund, you get exposure to a wide range of companies and industries, which can help reduce risk and improve long-term returns. The fund seeks to match the performance of the stocks composing the S&P 500 Index by investing at least 80% of its assets in common stocks of companies that make up the index.

In summary, the USAA S&P 500 Index Fund Reward Shares is a strong choice for investors looking for a cost-effective way to gain exposure to a diverse range of large-cap US stocks. By tracking the S&P 500 index, this fund offers a simple and effective investment strategy that has historically outperformed most stock pickers.

USAA Growth and Tax Strategy Fund

The fund seeks to balance income, with the majority exempt from federal income tax, and the potential for long-term capital growth. It does this by investing primarily in tax-exempt bonds and money market instruments (50%-70%) and the remainder in blue-chip stocks (30%-50%). The fund aims to minimise the impact of federal income tax on shareholders.

USBLX has returned 5.91% over the past year, 2.61% over three years, 4.97% over five years, and 5.89% over the past decade. It has an expense ratio of 0.54%, which is below average for its category.

The fund has proven effective at minimising capital gains taxes by investing in companies that reinvest profits back into their businesses, rather than paying taxable dividends. It has also been successful in generating tax-free income through its municipal bond portfolio.

USAA Extended Market Index Fund

The USAA Extended Market Index Fund (USMIX) is one of the best mutual funds that USAA has to offer. This fund is ideal for those who already own an S&P 500 index fund but want to invest in the smaller slice of the market that isn't covered by the S&P 500.

The USAA Extended Market Index Fund achieves this by tracking the Dow Jones U.S. Completion Total Stock Market Index, which consists of stocks that aren't included in the S&P 500 Index. This fund provides investors with exposure to a diverse range of US stocks beyond the large-cap companies in the S&P 500.

In terms of fees, the USAA Extended Market Index Fund has an annual expense of 0.48%, which is slightly higher than a typical index fund but still significantly lower than the average actively managed fund. As of August 31, 2024, it had an expense ratio of 0.36% and a distribution fee level of low, according to Morningstar.

The fund's management team has been rated as average by Morningstar, but the fund retains a Morningstar Medalist Rating of Bronze due to its solid investment process. The portfolio also maintains a sizable cost advantage over its competitors, priced within the lowest fee quintile among peers.

As of October 21, 2024, the USAA Extended Market Index Fund had total assets of 801.6 million, with a 1-day return of -1.40% and a NAV of 23.31. The minimum initial investment required for this fund is $3,000.

USAA's eligibility criteria

USAA is a member-owned insurance and financial services company that primarily serves U.S. military service members, veterans, and their families. The company was founded in 1922 by 25 Army officers who wanted to insure one another's vehicles. Since then, it has expanded its membership eligibility criteria and now serves over 13 million members.

• Active-duty military members of the U.S. Army, Navy, Air Force, Marines, Coast Guard, National Guard, and Reserves.
• Veterans who have retired or been honourably discharged from the U.S. military. Dishonourably discharged veterans are not eligible.
• Pre-commissioned officers, such as cadets and midshipmen at U.S. service academies, in advanced ROTC or on ROTC scholarship, and officer candidates within 24 months of commissioning.
• Members of certain federal agencies, such as the FBI.
• Family members of current USAA members and those who have served in the U.S. military, including spouses, widows, widowers, and unmarried former spouses.
• Children and stepchildren of USAA members. Grandchildren can also qualify if both their parents and grandparents are USAA members.

It's important to note that eligibility for USAA membership cannot be passed on posthumously. If parents who were eligible for membership are deceased and were not members, their children are not eligible. Additionally, membership can only be passed down to the next generation and not to siblings.

To establish USAA membership, individuals must provide proof of their military service or their relationship to a USAA member. This typically includes providing a Social Security number, a valid government-issued ID, and any relevant military documentation.

USAA's robo-advisory option

USAA does not appear to offer a robo-advisory option. However, if you are interested in robo-advisory services, there are several other companies that do offer them. Here is some information on robo-advisors and a few specific examples:

A robo-advisor is a low-cost, online investing platform that employs software algorithms to create and manage investment portfolios based on a client's goals and risk tolerance. They are a good option for those who want a managed portfolio for a low price and don't require advice on things like debt payoff and estate planning. Robo-advisors typically have low or no minimum balance requirements and charge affordable annual fees. Services offered by robo-advisors include automatic asset allocation, portfolio rebalancing, and tax optimization.

Examples of Robo-Advisors:

Wealthfront is considered the best overall robo-advisor due to its vast customization options, fee-free stock investing, low-interest rate borrowing, dynamic tax-loss harvesting, and other key features. It has a low required minimum investment of $500 and charges a 0.25% annual fee for most accounts.

Betterment is considered the best robo-advisor for beginners, cash management, tax-loss harvesting, and crypto. It has a $0 account minimum and a 0.25% annual fee for investing plan accounts with at least $20,000.

SoFi Automated Investing is considered the best robo-advisor for low costs, as it charges no investment management fee and only requires a $1 minimum investment.

These are just a few examples of robo-advisory services. There are many other companies that offer similar services, so be sure to do your research to find the one that best fits your needs.

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