Introduction
Investing in mutual funds can be a smart way to diversify your portfolio and potentially earn higher returns. But with so many options available, how do you choose the best mutual funds to add to your investment portfolio? One key factor to consider is past performance. In this article, we’ll take a look at 10 top performing mutual funds to consider for your investment portfolio.
What are mutual funds and how do they work?
A mutual fund is an investment vehicle that pools together money from many different investors and uses that money to buy a diversified portfolio of assets, such as stocks, bonds, and other securities. Each mutual fund is managed by a professional fund manager, who is responsible for researching and selecting the securities that make up the fund’s portfolio.
When you invest in a mutual fund, you are essentially buying a small piece of the fund’s portfolio. Your returns are based on the performance of the underlying assets, and they are generally more stable and diversified than if you were to invest in a single stock.
One of the main benefits of mutual funds is diversification. By investing in a variety of different securities, a mutual fund is able to spread risk across a wide range of assets. This can help to mitigate the impact of any individual investment underperforming, as the overall performance of the fund is not solely dependent on any one security.
How to select top performing mutual funds?
When selecting mutual funds for your investment portfolio, there are several factors to consider. One important factor is past performance. While past performance is not necessarily indicative of future results, it can give you an idea of how well a fund has performed over a certain period of time. Keep in mind, however, that even top performing mutual funds can experience downturns, so it’s important to also consider other factors such as fees and expenses, diversification, and the fund’s investment strategy.
Another important factor to consider is the fees and expenses associated with a mutual fund. These can include management fees, which are charged by the fund manager to cover the cost of researching and selecting securities, as well as other expenses such as trading fees and administrative costs. Higher fees can eat into your returns, so it’s important to compare the fees of different mutual funds and choose one that is competitively priced.
Diversification is also important when selecting mutual funds. A well-diversified fund should have a mix of different asset classes and securities, such as stocks, bonds, and cash, as well as exposure to different sectors and geographical regions. This can help to spread risk and potentially improve returns over the long term.
It’s also a good idea to consider the investment strategy of a mutual fund. Different funds have different approaches to investing, such as growth, value, or income-focused strategies. Selecting a fund that aligns with your own investment goals and risk tolerance can help you feel more comfortable with your investments.
Ratings agencies and financial advisors can also be a useful resource when evaluating mutual funds. Ratings agencies such as Morningstar and Lipper provide independent evaluations of mutual funds based on a variety of factors, including performance, fees, and risk. Financial advisors, such as certified financial planners (CFPs) or registered investment advisors (RIAs), can also provide personalized recommendations based on your individual financial situation and investment goals.
10 top performing mutual funds to consider:
- Fund name: Vanguard 500 Index Fund Asset class(es): Large-cap stocks Investment strategy: The Vanguard 500 Index Fund tracks the performance of the S&P 500, a widely-recognized index of 500 of the largest publicly-traded companies in the U.S. The fund is passively managed, meaning it aims to match the performance of the index rather than trying to outperform it through active management.
Past performance and risk profile: The Vanguard 500 Index Fund has a long track record of strong performance, with an average annual return of 12.6% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a diverse range of large-cap stocks.
Fees and expenses: The Vanguard 500 Index Fund has low fees, with an expense ratio of just 0.03%.
Minimum investment requirement: The minimum investment requirement for the Vanguard 500 Index Fund is $3,000.
Available investment options: The Vanguard 500 Index Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The Vanguard 500 Index Fund is a popular choice for investors looking for a low-cost, passively-managed mutual fund that provides broad exposure to the U.S. stock market.
- Fund name: T. Rowe Price Equity Income Fund Asset class(es): Large- and mid-cap stocks Investment strategy: The T. Rowe Price Equity Income Fund is a growth and income-focused fund that invests in a mix of large- and mid-cap stocks with a focus on dividends. The fund is actively managed, with a team of research analysts identifying companies with strong growth potential and the ability to generate consistent income for investors.
Past performance and risk profile: The T. Rowe Price Equity Income Fund has a strong track record of performance, with an average annual return of 10.9% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a mix of stocks with the potential for both growth and income.
Fees and expenses: The T. Rowe Price Equity Income Fund has moderate fees, with an expense ratio of 0.69%.
Minimum investment requirement: The minimum investment requirement for the T. Rowe Price Equity Income Fund is $2,500.
Available investment options: The T. Rowe Price Equity Income Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The T. Rowe Price Equity Income Fund is a good choice for investors looking for a mutual fund with a focus on both growth and income. The fund’s experienced research team and focus on dividends may make it particularly appealing to income-focused investors.
- Fund name: Fidelity Contrafund Asset class(es): Large- and mid-cap stocks Investment strategy: The Fidelity Contrafund is an actively-managed fund that invests in a mix of large- and mid-cap stocks with the goal of outperforming the S&P 500. The fund’s manager, Will Danoff, uses a bottom-up approach to stock selection, focusing on individual companies rather than sectors or industries.
Past performance and risk profile: The Fidelity Contrafund has a strong track record of performance, with an average annual return of 12.4% over the past 10 years (as of December 2021). The fund has a moderate to high level of risk, as it is invested in a mix of stocks with the potential for both growth and income.
Fees and expenses: The Fidelity Contrafund has moderate fees, with an expense ratio of 0.74%.
Minimum investment requirement: The minimum investment requirement for the Fidelity Contrafund is $2,500.
Available investment options: The Fidelity Contrafund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The Fidelity Contrafund is a popular choice for investors looking for an actively-managed mutual fund with a strong track record of performance. The fund’s experienced manager, Will Danoff, has been at the helm since 1990 and has a proven track record of outperforming the market.
- Fund name: PIMCO Total Return Fund Asset class(es): Bonds Investment strategy: The PIMCO Total Return Fund is a bond fund that invests in a diversified mix of fixed-income securities with the goal of generating high levels of income and capital appreciation. The fund is actively managed by PIMCO’s team of fixed-income experts, who use a range of investment strategies to generate returns.
Past performance and risk profile: The PIMCO Total Return Fund has a strong track record of performance, with an average annual return of 7.5% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a diversified mix of bonds with varying levels of credit quality and duration.
Fees and expenses: The PIMCO Total Return Fund has moderate fees, with an expense ratio of 0.69%.
Minimum investment requirement: The minimum investment requirement for the PIMCO Total Return Fund is $1,000.
Available investment options: The PIMCO Total Return Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The PIMCO Total Return Fund is a good choice for investors looking for a bond fund with a strong track record of performance. The fund’s experienced management team and diverse portfolio of fixed-income securities make it a solid addition to a well-diversified investment portfolio.
- Fund name: Invesco Oppenheimer Developing Markets Fund Asset class(es): Emerging market stocks Investment strategy: The Invesco Oppenheimer Developing Markets Fund is an actively-managed fund that invests in stocks of companies located in emerging markets around the world. The fund’s manager, Krishna Memani, and his team use a bottom-up approach to stock selection, focusing on individual companies with strong growth prospects and good management.
Past performance and risk profile: The Invesco Oppenheimer Developing Markets Fund has a strong track record of performance, with an average annual return of 11.9% over the past 10 years (as of December 2021). The fund has a high level of risk, as it is invested in emerging market stocks, which can be more volatile than developed market stocks.
Fees and expenses: The Invesco Oppenheimer Developing Markets Fund has moderate fees, with an expense ratio of 1.01%.
Minimum investment requirement: The minimum investment requirement for the Invesco Oppenheimer Developing Markets Fund is $2,500.
Available investment options: The Invesco Oppenheimer Developing Markets Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The Invesco Oppenheimer Developing Markets Fund is a good choice for investors looking to add emerging market exposure to their portfolio. The fund’s experienced management team and focus on high-quality companies make it a solid choice for those willing to take on higher risk in pursuit of potentially higher returns.
- Fund name: BlackRock Global Allocation Fund Asset class(es): Stocks, bonds, and cash Investment strategy: The BlackRock Global Allocation Fund is a multi-asset class fund that invests in a diversified mix of stocks, bonds, and cash. The fund is actively managed, with the goal of providing a balance of growth and income while also seeking to protect against market downturns.
Past performance and risk profile: The BlackRock Global Allocation Fund has a strong track record of performance, with an average annual return of 9.2% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a diversified mix of assets.
Fees and expenses: The BlackRock Global Allocation Fund has moderate fees, with an expense ratio of 0.80%.
Minimum investment requirement: The minimum investment requirement for the BlackRock Global Allocation Fund is $1,000.
Available investment options: The BlackRock Global Allocation Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The BlackRock Global Allocation Fund is a good choice for investors looking for a multi-asset class fund with a strong track record of performance. The fund’s diversified portfolio and actively-managed approach make it a solid choice for those seeking a balance of growth and income.
- Fund name: Franklin Templeton Emerging Markets Equity Income Fund Asset class(es): Emerging market stocks Investment strategy: The Franklin Templeton Emerging Markets Equity Income Fund is an actively-managed fund that invests in stocks of companies located in emerging markets around the world, with a focus on income generation. The fund’s management team uses a bottom-up approach to stock selection, focusing on individual companies with strong dividends and growth potential.
Past performance and risk profile: The Franklin Templeton Emerging Markets Equity Income Fund has a strong track record of performance, with an average annual return of 12.4% over the past 10 years (as of December 2021). The fund has a high level of risk, as it is invested in emerging market stocks, which can be more volatile than developed market stocks.
Fees and expenses: The Franklin Templeton Emerging Markets Equity Income Fund has moderate fees, with an expense ratio of 1.08%.
Minimum investment requirement: The minimum investment requirement for the Franklin Templeton Emerging Markets Equity Income Fund is $1,000.
Available investment options: The Franklin Templeton Emerging Markets Equity Income Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The Franklin Templeton Emerging Markets Equity Income Fund is a good choice for investors looking for an emerging markets fund with a focus on income. The fund’s experienced management team and dividend-focused investment strategy make it a solid choice for those seeking a combination of growth and income from emerging market stocks.
- Fund name: Charles Schwab International Equity ETF Asset class(es): International stocks Investment strategy: The Charles Schwab International Equity ETF is an exchange-traded fund (ETF) that tracks the performance of the FTSE Developed ex-U.S. Index, a benchmark of developed market stocks outside the U.S. The fund is passively managed, meaning it aims to match the performance of the index rather than trying to outperform it through active management.
Past performance and risk profile: The Charles Schwab International Equity ETF has a strong track record of performance, with an average annual return of 8.8% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a diversified mix of developed market stocks.
Fees and expenses: The Charles Schwab International Equity ETF has low fees, with an expense ratio of 0.06%.
Minimum investment requirement: There is no minimum investment requirement for the Charles Schwab International Equity ETF.
Available investment options: The Charles Schwab International Equity ETF is available for investment through brokerage accounts.
Additional notable features or considerations: The Charles Schwab International Equity ETF is a good choice for investors looking for a low-cost way to gain international exposure. The fund’s passive management and low fees make it a cost-effective option for those looking to add international stocks to their portfolio.
- Fund name: T. Rowe Price Real Estate Fund Asset class(es): Real estate investment trusts (REITs) Investment strategy: The T. Rowe Price Real Estate Fund is a mutual fund that invests in a diversified mix of real estate investment trusts (REITs). REITs are companies that own and operate income-generating real estate assets, such as apartment buildings, shopping centers, and office buildings. The fund is actively managed, with the goal of providing a balance of income and capital appreciation.
Past performance and risk profile: The T. Rowe Price Real Estate Fund has a strong track record of performance, with an average annual return of 11.6% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a diversified mix of REITs.
Fees and expenses: The T. Rowe Price Real Estate Fund has moderate fees, with an expense ratio of 0.72%.
Minimum investment requirement: The minimum investment requirement for the T. Rowe Price Real Estate Fund is $2,500.
Available investment options: The T. Rowe Price Real Estate Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The T. Rowe Price Real Estate Fund is a good choice for investors looking for exposure to the real estate sector. The fund’s diversified portfolio and actively-managed approach make it a solid choice for those seeking a combination of income and capital appreciation from REITs.
- Fund name: Invesco Balanced-Risk Allocation Fund Asset class(es): Stocks, bonds, and cash Investment strategy: The Invesco Balanced-Risk Allocation Fund is a multi-asset class fund that invests in a diversified mix of stocks, bonds, and cash. The fund is actively managed, with the goal of providing a balance of growth and income while also seeking to protect against market downturns. The fund’s management team uses a strategic asset allocation approach, meaning they regularly adjust the fund’s asset mix based on their outlook for different markets and asset classes.
Past performance and risk profile: The Invesco Balanced-Risk Allocation Fund has a strong track record of performance, with an average annual return of 9.1% over the past 10 years (as of December 2021). The fund has a moderate level of risk, as it is invested in a diversified mix of assets.
Fees and expenses: The Invesco Balanced-Risk Allocation Fund has moderate fees, with an expense ratio of 0.82%.
Minimum investment requirement: The minimum investment requirement for the Invesco Balanced-Risk Allocation Fund is $2,500.
Available investment options: The Invesco Balanced-Risk Allocation Fund is available in a variety of investment options, including individual and employer retirement accounts such as 401(k)s and IRAs.
Additional notable features or considerations: The Invesco Balanced-Risk Allocation Fund is a good choice for investors looking for a multi-asset class fund with a focus on risk management. The fund’s strategic asset allocation approach and diversified portfolio make it a solid choice for those seeking a balance of growth and income while also seeking to protect against market downturns.
Conclusion
In conclusion, it is important for investors to carefully consider their investment objectives and risk tolerance when selecting mutual funds for their portfolio. The 10 top performing mutual funds highlighted in this article represent a diverse range of asset classes and investment strategies, and each has its own unique features and considerations. Some of these mutual funds may be a good fit for certain investors, while others may not be suitable for everyone. It is always a good idea to do your own research and seek professional advice before making any investment decisions. By carefully evaluating your options and making informed choices, you can build a portfolio that aligns with your financial goals and risk tolerance.
