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It is natural for us to want to know which the best performing mutual funds today when we shop for them.
You should keep in mind that when looking for the best mutual funds, you’re shopping for tomorrow. A top performer in the short term may not become a long-term winner. The best mutual funds for your portfolio will probably not be the best for your parents, your siblings, or your neighbors.
best performing mutual funds U.S. equity
Using data from Morningstar (a NerdWallet advertising partner), we evaluated major U.S. equity funds open to new investors with low costs (no sales commissions, and expense ratios of 1% or less) and minimum investment requirements of $2,500 or less.
You can read this section to learn more about picking mutual funds.
| Fund | Symbol | 3-year return | Expense ratio |
|---|---|---|---|
| Fidelity Advisor Series Growth Opportunities Fund | FAOFX | 35.02% | 0.01% |
| Fidelity Advisor Growth Opps Z | FZAHX | 34.67% | 0.69% |
| Fidelity Advisor Growth Opps I | FAGCX | 34.51% | 0.81% |
| Fidelity Series Growth Company | FCGSX | 31.19% | 0.00% |
| Fidelity Series Blue Chip Growth | FSBDX | 30.45% | 0.00% |
| American Century Focused Dynamic Gr Inv | ACFOX | 30.08% | 0.85% |
| Fidelity Growth Company K | FGCKX | 29.95% | 0.75% |
| Fidelity Growth Company | FDGRX | 29.84% | 0.83% |
| Touchstone Sands Capital Select Growth Y | CFSIX | 29.71% | 0.94% |
| Fidelity Blue Chip Growth K | FBGKX | 29.24% | 0.71% |
| Fidelity Blue Chip Growth | FBGRX | 29.13% | 0.79% |
| T. Rowe Price New Horizons | PRNHX | 28.71% | 0.75% |
| Columbia Small Cap Growth Inst2 | CSCRX | 28.50% | 0.94% |
| Lord Abbett Growth Leaders R6 | LGLVX | 27.93% | 0.59% |
| Lord Abbett Growth Leaders F | LGLFX | 27.85% | 0.65% |
Data current as of October 19, 2021.
How to choose the best performing mutual funds for you
As a general rule, NerdWallet recommends investing primarily in mutual funds, especially index funds, which passively track market indices such as the S&P 500. Actively managed mutual funds strive to outperform stock market performance, which is a strategy that often fails.
Here are some things to consider when investing in funds:
- Decide whether to invest in active or passive funds, knowing that both performance and costs often favor passive investing.
- Examine fees and expenses carefully. Investing in mutual funds with no transaction fees can help cut costs.
- You should review and rebalance your mix of assets once a year while building and managing your portfolio.
Average mutual fund return
Portfolio management also involves managing expectations, and different types of mutual funds should bring different returns.
Stock mutual funds = higher potential returns (or losses)
Stock mutual funds, also known as equity mutual funds, provide the highest potential profits, but also carry the highest risks – and different categories of stock mutual funds come with varying levels of risk.
Stock index funds are typically less volatile than large-cap high-growth funds, for example, which aim to match the returns of an index such as the S&P 500.
Bond mutual funds = lower returns (but lower risk)
Mutual funds that invest in bonds, as their name suggests, have a more stable return rate than stock funds. Therefore, they have lower potential returns.
Governments and corporations issue bonds that have a set repayment period and interest rate. While it is impossible to predict future stock market returns, bonds are considered safer investments since governments and companies typically pay back their debts (unless both go bankrupt).
Money market mutual funds = lowest returns, lowest risk
A fixed-income mutual fund that invests in top-quality, short-term debt. These are among the most safe investments. Investors who want to protect their retirement savings while earning some interest – typically between 1% and 3% per year – use money market funds.
Best Mutual Funds
Focus on what best performing mutual funds
It might be natural to chase past performance, but it isn’t always a good strategy when predicting your financial future. Investing for retirement, such as buy-and-hold, relies heavily on mutual funds. Stock-hopping based on performance is an old-fashioned tactic that rarely results in big profits. This is especially true with mutual funds, where each transaction may incur costs that erode any long-term gains.
When buying mutual funds, you need to consider how they will fit into your overall portfolio. Rather than buying stock in a single company, mutual funds invest in a collection of companies. Diversification spreads your risk.
By picking a few well-chosen mutual funds or exchange-traded funds, plus re-evaluating your investment mix every year, you can build a smart, diversified portfolio.
At the original time of publication, the author did not hold positions in any of the aforementioned securities.
source: the boo money
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