Mutual Funds: Best Investment Options For Tonight

Mutual funds are a popular investment option for individuals, especially for retirement accounts like 401(k)s. They are a relatively hands-off way to invest in many different assets at once.

When choosing a mutual fund, it's important to consider your risk profile and investment goals. If you are investing for the long term, you may opt for higher-risk funds with higher returns, whereas lower-risk funds are more suitable for shorter-term goals.

- Fidelity Select Semiconductors

- Fidelity Series Growth Company

- Fidelity Growth Company Fund

- Vanguard Total Stock Market Index Fund

- Fidelity U.S. Sustainability Index Fund

- Vanguard Russell 2000 ETF

- Vanguard Total Stock Market ETF

Taxable bond mutual funds

Fidelity Floating Rate High Income Fund (FFRHX)

FFRHX is a fund that focuses on lower-credit-quality bank loans issued to non-investment-grade companies with strong balance sheets and high free cash flow. With an average effective duration of just a few months, FFRHX's share price remains stable even with changing interest rates. The fund has outperformed its category's average annual return over the past one, three, five, and ten years.

Vanguard High-Yield Corporate Investor Shares (VWEHX)

Known for its low-cost investment options, Vanguard's VWEHX fund has an expense ratio of just 0.22%, the lowest on our list. While the fund has undergone some management changes, it maintains a conservative approach, taking on less credit risk than its peers. With an average credit rating of BB, the fund holds approximately 800 bonds and has a modest turnover ratio of around 35%.

T. Rowe Price Intermediate Tax-Free High Yield Fund (PRIHX)

PRIHX is a municipal bond fund that appeals to investors in higher tax brackets due to its federally tax-exempt cash flow. The fund invests in a range of credit qualities but leans towards higher-yielding issues, including those rated below investment grade. With an average effective duration of just over four years, PRIHX's value may fluctuate with changing interest rates but offers stable cash flow and the potential for capital appreciation.

American Century High Income Fund Investor Class (AHIVX)

The American Century High Income Fund has consistently outperformed its high-yield bond fund category, delivering impressive total returns. The fund invests in high-yield corporate debt, focusing on companies with strong cash flows and the ability to carry their debt loads. AHIVX holds approximately 1,300 securities, with an average effective duration of less than four years, making it a stable investment option.

Northern Multi-Manager High Yield Opportunity Fund (NMHYX)

NMHYX is a well-diversified fund with over 1,300 holdings and a turnover of about 68%. It has a low expense ratio compared to its category average, which often correlates with higher returns. The fund invests at least 80% in below-investment-grade fixed-income corporate securities, seeking high yields and capital appreciation while maintaining lower volatility than its peers.

International stock mutual funds

International and global stock funds are a great way to diversify your portfolio. They are a type of mutual fund that invests in companies outside of the United States, providing investors with exposure to different countries and industries. These funds typically own many individual stocks in different countries, offering investors multiple layers of diversification, including geographical, currency, and sector diversification. This helps to reduce the risk of a single stock or country negatively impacting the entire portfolio.

• FMI International Fund (FMIJX)
• Boston Trust Walden International Eq (WIEFX)
• Fidelity® China Region Fund (FHKAX)
• BlackRock China A Opportunities Fund (CHKLX)
• Matthews China Dividend Fund (MCDFX)
• LSV Emerging Markets Equity Fund (LSVZX)
• Pzena Emerging Markets Value Fund (PZIEX)
• Eaton Vance Emerg & Frntr Countrs Eq Fd (EACOX)
• Fidelity® Pacific Basin Fund (FPBFX)
• Matthews Asia Dividend Fund (MAPIX)
• Matthews Asia Growth Fund (MPACX)
• Brown Advisory - WMC Strat Eurp Eq Fd (BAFHX)
• ProFunds Europe 30 Fund (UEPIX)
• Janus Henderson European Focus Fund (HFEAX)

When investing in international markets, it's important to be aware of the risks involved, such as currency risk, political and economic instability, and changes in regulatory conditions. These risks can be higher in emerging markets due to less regulated economies. However, international stock funds offer the potential for greater capital appreciation and a broader variety of income sources compared to domestic stock funds.

Before investing in any mutual fund, be sure to do your research and understand the fees, performance, and fund type. It's also important to consider your budget and how the fund fits into your overall investment portfolio and goals.

Balanced mutual funds

• Sextant Global High Income Fund (SGHIX): This fund is ranked by US News as one of the best balanced mutual funds.
• Vanguard Global Wellington Fund (VGWAX): Also ranked by US News as a top balanced fund, this fund is back on the roster after being cut in 2022 to make way for a commodity fund as an inflation hedge.
• Dodge & Cox Income (DODIX): This fund replaced TIAA-CREF Core Impact Bond (TSBRX) in the Kiplinger 25 list of favourite no-load mutual funds. It has a strong long-term record, with a 10-year annualised return of 2.4%, beating 92% of its peers.
• Vanguard Wellington (VWELX): This fund was removed from the Kiplinger 25 list in 2022 to make way for a commodity fund but has been reinstated with inflation rates normalising.
• Fidelity Intermediate Municipal Income (FLTMX): This fund focuses on bonds with a dollar-weighted average maturity between three and 10 years. About 90% of its diversified bonds are rated A or better, minimising default risk.
• Vanguard Equity Income: This fund has a 2.8% yield, which tops the 1.4% yield of the S&P 500.

Alternative mutual funds

• AQR Long-Short Equity Fund (QLEIX)
• Federated Hermes MDT Market Neutral Fund (QAMNX)
• Nuveen Equity Long/Short Fund (NELAX)
• LoCorr Long/Short Commodity Strategies Fund (LCSAX)
• Hussman Strategic Total Return Fund (HSTRX)
• Hilton Tactical Income Fund (HCYIX)
• Gabelli Global Rising Income and Dividend Fund (GAGAX)

Before investing in alternative mutual funds, it is important to conduct thorough research and understand the risks involved. Alternative investments are generally less liquid and more complex than traditional investments, and they may have higher fees and transaction costs. They are also subject to less regulatory oversight, which increases the risk of fraud and misconduct.

Commodities mutual funds

If you're looking to invest in commodities mutual funds, you'll be looking for funds that provide exposure to the price changes of raw materials. These include agricultural goods (such as corn, cotton, wheat, etc.), natural resources (oil, natural gas, etc.), and metals (gold, silver, etc.).

• Equity holdings in commodity-related companies: These funds hold equities in commodity-related companies, such as agricultural, energy, or mining companies.
• Futures contracts: These trade on exchanges, similar to stocks and bonds, and don't require storage like physical commodities do. When a futures contract approaches its delivery date, the holder will typically "roll" that contract in exchange for another contract of the same commodity to be delivered further in the future.
• Combination of equities and futures: Some funds hold a combination of both equities of commodity-related companies and commodities futures contracts.
• Gabelli Gold Fund: This fund offers exposure to the gold and precious metals markets, with at least 80% of its assets invested in both US and foreign stocks of companies engaged in gold-related business operations. As of March 14, 2022, it had assets of $422 million, a one-year return of 16.69%, and a five-year return of 10.13%.
• Invesco Balanced-Risk Commodity Strategy Fund: This fund offers investors a broader basket exposure to the total commodities market, investing in derivatives and other commodity-based instruments that reflect the performance of the underlying commodities. Its top holdings include gold, soybean futures, and gasoline futures. As of February 28, 2022, it had assets of $1.24 billion, a one-year return of 19.85%, and a five-year return of 5.43%.
• BlackRock Commodity Strategies Fund: This fund offers exposure to four principal commodity groups: energy, precious metals, industrial metals, and agriculture. It implements two strategies: commodity-linked derivatives and equity investments in commodity-related companies. As of March 14, 2022, it had assets of $2.2 billion, a one-year return of 26.54%, and a five-year return of 8.08%.
• Fidelity Commodity Strategy Fund: This fund seeks to provide investment returns that correspond to the performance of the commodities market.
• BlackRock Commodity Strategies Portfolio: This fund seeks total returns and expects to invest approximately 50% of its total assets in commodity-linked derivative instruments and cash or cash equivalents, with the remainder in equity securities of commodity-producing and commodity-related companies.
• DFA Commodity Strategy Portfolio: This fund seeks total returns consisting of capital appreciation and current income. It achieves its investment objective by investing in a combination of commodity-linked derivative instruments and equity securities of companies that derive a substantial portion of their revenues from commodities.
• Goldman Sachs Commodity Strategy Fund: This fund seeks long-term total returns and maintains substantial economic exposure to the performance of the commodities markets.

Frequently asked questions