Whether the financial outlook and scenario is positive or negative, investors have always looked to mutual funds to invest in, as they form the backbone of anybody’s investing strategy. However, choosing and selecting mutual funds is easier said than done. This article gives you an idea about the top 10 mutual funds to park your money in to get a compelling growth and return on your portfolio:
Vanguard 500 Index Fund (VFINX)
Minimum Initial Investment: $3,000, Expenses: 0.16%
At the base of any great, solid portfolio of mutual funds is a core holding, and the best fund to do the job in 2017 is the Vanguard 500 Index Fund. While one might argue that the Vanguard Total Stock Market Index is the world’s largest stock mutual fund (as assets under management go), the fund is exposed to mid and small-caps could hold it back. Since this year will be dominated by lesser or no risk, the presence of a core fund such as the Vanguard 500 Index which focuses only on the large-cap US stocks is required. This is one of the top 10 mutual funds.
Fidelity Nasdaq Composite Index Fund (FNCMX)
Minimum Initial Investment: $2,500, Expenses: 0.29%
According to broad economic conditions, we’re, in all probability, in the mature phase of the economic business cycle. This is one of the top 10 mutual funds. Hence, any good investment portfolio needs some broad growth exposure, which can be gotten via the Fidelity Nasdaq Composite Index Fund. This fund tracks the NASDAQ Composite Index, thereby featuring the bigger, large-cap growth stocks including Facebook, Amazon, Microsoft, and Apple. In fact, the top 10 holdings in the fund feature 8 tech stocks which account for roughly 30% of the weight of the fund, and IT stocks make up 50% of the fund’s holdings.
Vanguard Health Care (VGHCX)
Minimum Initial Investment: $3,000, Expenses: 0.36%
The momentum in the healthcare sector, which was given a boost by President Trump’s win, is expected to continue for the rest of the year, with funds such as the Vanguard Health Care fund doing well. While the fund doesn’t exactly feature high risk-high growth stocks, it does have some pretty good pharma and biotech names to which it offers good exposure; however, this is only about 15% of the fund. Other segments include managed healthcare services, technology and healthcare equipment, and the fund makes for a good defensive play in a downward trend. This is one of the top 10 mutual funds.
Fidelity Select Banking (FSRBX)
Minimum Initial Investment: $2,500, Expenses: 0.79%
Financial stocks are an attractive bet currently, including the Fidelity Select Banking Fund. While the fact that increasing interest rates could create narrower spreads between deposit and treasury rates is true, this ceases to be an issue until the spreads reach standard, regular levels. This is one of the top 10 mutual funds. However, the federal rates are so uncharacteristically lesser now that an increase in interest rates could only end up helping the banks widen their spreads before tightening them. What’s more, FSRBX also has exposure to insurance companies and brokerages, strengthening its position.
Fidelity Select Consumer Staples Fund (FDFAX)
Minimum Initial Investment: $2,500, Expenses: 0.77%
FDFAX is a smart, defensive way to diversify your portfolio. While last year was tough on consumer staples stocks, the sector has breakeven this year too—so Fidelity Select Consumer Staples is still on the opposite playing field. However, higher valuations and an aging bear market economy is breeding ground for uncertainty, pushing investors towards “safer” bets such as FDFAX which include stocks such as British American Tobacco and P&G. This is one of the top 10 mutual funds.
Vanguard Energy Fund (VGENX)
Minimum Initial Investment: $3,000, Expenses: 0.37%
If energy continues its 2016 spree, it could end up as one of 2017’s top performing sectors as well. And while the momentum might slow down somewhere in the middle, the Vanguard Energy Fund looks like a great MF to invest in. This is one of the top 10 mutual funds. The fund is heavy in upstream and integrated gas and oil stocks (for instance Chevron and Exxon Mobil), and if oil prices push higher in the wake of more demand and less supply, this fund should perform well. This fund also offers a little exposure to storage, equipment and refining play too.
T. Rowe Price Floating Rate Fund (PRFRX)
Minimum Initial Investment: $2,500, Expenses: 0.79%
The PRFRX is a smart substitute to traditional bond index funds, whom rising rates affect badly. However, the floating rate nature of the T. Rowe Fund could possibly fight the stormy fixed rate atmosphere. Floating rate bonds such as the T. Rowe adjust regularly and the interest rates are attached to benchmarks such as the prime/Libor/US Treasury bill rate – which increases their possibility of apricating in value when interest rates rise. This is one of the top 10 mutual funds.
Vanguard Short-Term Investment-Grade Fund (VFSTX)
Minimum Initial Investment: $3,000, Expenses: 0.2%
In the slowly and steadily growing US economy, the one fund that one should have by their side is the Vanguard Short-Term Investment-Grade Fund. This is one of the top 10 mutual funds. Long-term bond funds usually get hit by rising interest rates, whereas short-term bonds are lesser sensitive to changes in interest rates and can, thus perform better in an environment where interest rates are rising. Such bonds such as VFSTX have higher yields than treasuries and have better pricing stability as well.
Hussman Strategic Total Return Fund (HSTRX)
Minimum Initial Investment: $1,000, Expenses: 0.79%
This fund allows investors to keep market risk at the minimum while hedging against inflation as well with very little effort. This is one of the top 10 mutual funds. With a portfolio largely consisting of fixed-income securities, this fund’s tactics are much like that of a hedge fund – in volatile markets, there is movement from of fund assets to commodity-based securities, stocks, or cash.
Vanguard Balanced Index Fund (VBINX)
Minimum Initial Investment: $3,000, Expenses: 0.22%
A balanced fund such as VBINX could perform well this year. Allocating assets to both bonds and stocks (usually 60-40 in either direction), this moderate allocation fund has an even split of sectors and leans heavily towards technology and financials. This is one of the top 10 mutual funds.
