Best Mutual Funds: Where To Invest Smartly

Mutual funds are a popular investment option for many individuals. However, with thousands of mutual funds available, selecting the best ones to invest in is not an easy task. The best mutual funds for you will depend on your investment goals, risk tolerance, and time horizon. Here are some factors to consider when choosing the best mutual funds to invest in:

- Investment goals: Understand your investment goals and choose funds that align with them. For example, if you're investing for the long term, equity mutual funds may be a good option.

- Risk tolerance: Consider your risk tolerance and choose funds with a risk level you're comfortable with. If you have a low-risk appetite, invest in low-risk funds, while investors seeking higher returns can opt for high-risk funds.

- Time horizon: Determine how long you plan to invest. Investing for the long term can help you reach your expected returns while minimising risks.

- Fund performance: Evaluate the fund's historical performance and compare it to benchmarks and similar funds to assess its potential for future returns.

- Fund manager's experience: Assess the fund manager's qualifications, track record, and ability to deliver consistent results.

- Net Asset Value (NAV): Keep in mind that funds with higher NAVs may offer lower returns, but they often invest in more reliable assets.

- Expense ratio: Look for funds with lower expense ratios to keep charges minimal and maximise your returns.

- Exit loads: Some funds impose exit loads for early withdrawal, so check for any associated fees or implications.

- Aditya Birla Sun Life PSU Equity Fund Direct-Growth: Very high-risk fund with an expense ratio of 0.50%.

- SBI PSU Direct Plan-Growth: Allocates 91.05% of its investments to equities with an expense ratio of 0.92%.

- ICICI Prudential Infrastructure Direct Growth: Invests 91.47% of its assets in equities with an expense ratio of 1.03%.

- HDFC Infrastructure Direct Plan-Growth: Allocates 85.78% of its assets to domestic equities and has an expense ratio of 1.24%.

- Quant Infrastructure Fund Direct-Growth: Invests 90.72% of its assets in equities with an expense ratio of 0.73%.

Growth funds for long-term capital gains

When considering growth funds for long-term capital gains, it's important to understand the characteristics of growth stocks and the strategies employed by growth investors.

Growth stocks are typically defined by their high growth rates for earnings, sales, book value, and cash flow, as well as high valuations. Growth investors focus on metrics that justify an increase in share price and valuation multiples, such as revenue growth, earnings-per-share (EPS) growth, and margin expansion. They aim to identify companies expected to grow faster than the overall market.

• BNY Mellon Large Cap Securities Fund: This fund seeks long-term capital growth while also considering the preservation of capital and current income as secondary objectives.
• AB Large Cap Growth Fund: This fund focuses on long-term capital growth by investing in a limited number of carefully selected large companies.
• Fidelity Advisor® Series Equity Gr Fund: This fund aims for capital appreciation by investing primarily in equity securities, typically in common stocks.
• Congress Large Cap Growth Fund: The fund's adviser seeks long-term capital growth by investing at least 80% of its net assets in common stocks of large-cap companies.
• Vanguard Mega Cap Growth ETF (MGK): This fund focuses on the largest growth stocks in America and tracks the CRSP US Mega Cap Growth Index. It includes well-known companies like Microsoft, Apple, Nvidia, and Amazon in its top holdings.
• Fidelity Contrafund (FCNTX): This fund has been managed by William Danoff since 1990, evolving from a contrarian-styled fund to one that adopts a growth investing strategy. It has outperformed its benchmark, the S&P 500, over the last decade.
• IShares S&P 500 Growth ETF (IVW): This fund isolates the growth-oriented stocks from the broader S&P 500, including companies like Microsoft, Apple, Nvidia, and Amazon in its top holdings.
• T. Rowe Price Mid-Cap Growth Fund (RPMGX): Managed by Brian Berghuis, this fund considers valuations and targets companies with sustainable business models and strong earnings growth.

These funds offer diverse strategies and focus on different segments of the market, providing options for investors seeking long-term capital gains through growth funds.

Income funds for current income

Income funds are a type of mutual fund or exchange-traded fund (ETF) that emphasises current income, usually in the form of interest or dividends, either on a monthly or quarterly basis. They are often considered lower risk than funds that prioritise capital gains.

Share prices of income funds are not fixed; they tend to fall when interest rates are rising and increase when interest rates are falling.

• First Trust Morningstar Dividend Leaders Index ETF (FDL): This fund has a 0.45% expense ratio and generated a total annualised return of 13.7% over the past three years as of September 12, 2023.
• IShares Select Dividend ETF (DVY): The iShares Select Dividend ETF focuses on high-yield dividend stocks that have consistently paid their shareholders. It has a 0.38% expense ratio and an annual dividend yield of 3.7%.
• Nicholas Equity Income Fund (NSEIX): This fund has been around since 1993 and focuses on dividend-paying stocks. It has generated a total annualised return of 10.6% over the past three years as of September 12, 2023, and has a 0.7% expense ratio.
• Invesco High Yield Equity Dividend Achievers ETF (PEY): This ETF has a trailing 12-month yield of 4.3% and a 0.52% expense ratio. About 90% of the fund's assets are invested in dividend-paying stocks.
• Vanguard Equity Income Fund (VEIPX): This fund from Vanguard, known for its lower expense ratios, has a 0.28% expense ratio and a $3,000 minimum investment. It focuses on large value dividend stocks and has generated a 12.95% annualised return over the past three years as of September 12, 2023.
• Vanguard High Dividend Yield ETF (VYM): This fund focuses on large value stocks and has a very low 0.06% expense ratio. It has $49.5 billion in assets under management, spread across 463 holdings. It pays out a quarterly dividend and has an annual yield of 3.1%.

Bond funds for low volatility

Bond funds are a great option for investors who want to prioritise income preservation and yield over riskier assets like stocks. Here is a detailed overview of some of the best bond funds for low volatility:

Vanguard Short-Term Bond ETF

With over $33 billion in assets under management, the Vanguard Short-Term Bond ETF (BSV) is a solid investment choice. The fund focuses primarily on highly-rated, short-dated bonds with an effective maturity of less than three years. Over 70% of the portfolio is invested in top-rated AAA bonds, mainly US Treasuries, providing a stable and low-risk investment option. The fund has delivered strong returns, outperforming its benchmark index during turbulent market conditions.

Fidelity Limited-Term Municipal Income Fund (FSTFX)

This municipal bond fund from Fidelity has a history of managing risk effectively. The fund avoids risky pockets of the muni market and derivatives that can add volatility. As a result, it has experienced modest losses during market downturns. With a silver rating from Morningstar and a 15-year return of 2.45%T. Rowe Price Tax-Free Short-Intermediate Fund (PRFSX)

The T. Rowe Price Tax-Free Short-Intermediate Fund is another muni bond offering that has effectively managed risk. The fund limits exposure to risky parts of the muni market and individual issuers, resulting in minimal losses. With a bronze rating from Morningstar and a 15-year return of 2.45%Dodge & Cox Income Fund (DODIX)

The Dodge & Cox Income Fund is an actively managed bond fund with a strong track record. Launched in 1989, the fund has endured for over 35 years, thanks to its focus on fundamental research and screening for yield, credit quality, liquidity, call risk, duration, and appreciation potential. With an average effective duration of under six years and an expense ratio of 0.41%, it offers a good combination of stability and low fees.

Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)

For investors seeking a combination of income and capital appreciation, the Vanguard Long-Term Investment-Grade Fund is a solid choice. With an average effective duration of around 13 years, the fund promises higher income and potential capital gains when interest rates decline. Over 90% of the bonds in the fund are rated A or better, providing a relatively safe investment option. Vanguard's low fees ensure more of your investment goes into the bonds themselves.

These bond funds offer investors a range of options for those seeking low volatility in their portfolios. Remember to consider your investment goals, risk tolerance, and fees when making investment decisions.

Balanced funds for low-risk

Balanced funds, also known as blended funds, are a type of mutual fund that invests in a mix of stocks and bonds. These funds are ideal for intermediate-term investors as they balance the portfolio by investing in both stocks and bonds. Here are some of the best balanced funds for low-risk investors:

Vanguard Wellington (VWELX)

This fund is a great option for investors seeking a balance between stocks and bonds. It holds 65% of its assets in stocks and 35% in bonds. The fund has delivered strong returns, outperforming its peers in the past year with a 17% return. With a low expense ratio of 0.27%, it is a good choice for cost-conscious investors.

Dodge & Cox Income (DODIX)

DODIX is an actively managed bond fund with over 35 years of history. It has a strong track record, outperforming its peers and the Bloomberg U.S. Aggregate Bond Index over the past 10 years. The fund has a low expense ratio of 0.41% and focuses on high-quality, intermediate-term bonds.

Vanguard Global Wellington Fund (VGWAX)

The VGWAX fund is designed for investors seeking global exposure while maintaining a balanced portfolio. It invests in a mix of U.S. and international stocks and bonds, providing diversification across different markets.

Sextant Global High Income Fund (SGHIX)

The SGHIX fund is another option for global investors seeking a balanced approach. It invests in a mix of stocks, bonds, and other securities from various countries, providing a diversified portfolio for intermediate-term investors.

Cohen & Steers Alternative Income Fund (DVFAX)

The DVFAX fund is a unique balanced fund that invests in a mix of stocks, bonds, and alternative assets such as real estate and commodities. It aims to provide a steady income stream while managing risk.

TIAA-CREF Lifestyle Income Fund (TSITX)

The TSITX fund is a conservative allocation fund that aims to provide a stable income stream with low risk. It invests in a mix of stocks, bonds, and cash, making it suitable for investors seeking capital preservation and a steady income.

When investing in balanced funds, it is important to consider your investment goals, risk tolerance, and time horizon. These funds offer a diversified approach to investing, making them suitable for intermediate-term investors who want a mix of stocks and bonds in their portfolio while managing risk.

Index funds for low fees

Index funds are a type of mutual fund or exchange-traded fund (ETF) that tracks a particular market index, like the S&P 500. They are passively managed, meaning they are not actively managed by a professional investment manager, which keeps operating expenses and fees low.

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

VTSAX is an excellent option for investors seeking broad diversification and low costs. It tracks the CRSP U.S. Total Market Index, which includes thousands of mid- and small-cap stocks in addition to the S&P 500. With an expense ratio of just 0.04%, VTSAX offers a cost-effective way to gain exposure to the entire U.S. stock market.

Vanguard Total Stock Market ETF (VTI)

VTI is an exchange-traded fund (ETF) version of VTSAX, offering the same broad diversification at a slightly lower expense ratio of 0.03%. As an ETF, it has no minimum investment requirement, making it accessible to investors with any budget.

BNY Mellon U.S. Large Cap Core Equity ETF (BKLC)

BKLC is an ETF that tracks the Solactive GBS United States 500 Index TR and charges a true 0% expense ratio. While there may be implicit bid-ask spread and brokerage commission costs, this fund is an excellent choice for investors looking to minimise fees.

Fidelity Zero Total Market Index Fund (FZROX)

FZROX is a mutual fund offered by Fidelity that tracks the Fidelity U.S. Total Investable Market Index. It charges a 0% expense ratio and has no transaction fees or minimum investment requirement, making it a great option for Fidelity brokerage platform users.

Vanguard 500 Index Fund Admiral Shares (VFIAX)

VFIAX is a Vanguard Admiral Shares mutual fund that tracks the S&P 500. With a minimal expense ratio of 0.04%, it offers investors a low-cost way to match the returns of the U.S. market. However, it has a $3,000 minimum investment requirement.

Schwab S&P 500 Index Fund (SWPPX)

SWPPX is a low-cost index fund offered by Schwab that provides exposure to the S&P 500, one of the most widely followed stock market indexes. With a 10-year average annual return of over 12% and no minimum initial investment requirement, it is an excellent choice for investors looking for broad diversification at a low cost.

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