Are you trying to invest for the long-term so that you’ll have enough money to really enjoy your retirement? If so, you might want to consider investing in mutual funds.
These funds allow investors to pool money and invest it together to get greater returns with lower risk. And, they help individuals and smaller investors easily buy stocks and securities that might otherwise be out of reach or at least tricky to access.
The best mutual fund companies are known for their stability, solvency and proven track record of earning competitive returns. To help you find the best mutual fund companies for your money, here is a list of the biggest and best mutual fund families, along with a breakdown of their asset allocation, costs and fees, and returns based on reports from Morningstar.
1. BlackRock Inc.
A Fortune 100 company, BlackRock is a powerhouse mutual fund that manages more than 7,700 portfolios and more than $4.77 trillion in assets, which makes it one of the biggest and most stable and solvent funds out there.
The BlackRock fund family’s asset allocation is as follows: just over half in stocks (54.1 percent), 32.4 percent in bonds and 11 percent in cash, according to data reported by Morningstar. With a third of assets held in bonds, this steady and stable fund might be ideal for those within two decades of retirement and seeking to downgrade their risk exposure.
BlackRock mutual fund family has earned the following yearly returns:
- 2011: -0.7 percent
- 2012: 11.0 percent
- 2013: 14.9 percent
- 2014: 4.8 percent
- 2015: 3.3 percent
For a more long-view of BlackRock mutual fund family’s performance, it’s helpful to look at the trailing returns, which are 10.57 percent for the past three years and 9.3 percent for the past five. Of course, one of the biggest benefits of a mutual fund is that it delivers a decent return while helping investors easily maintain a balanced portfolio with low risk, and naturally offer lower returns.
Lastly are the costs of this fund family; its expenses are average, with ratios that range from 0.91 percent on taxable bonds up to 1.49 percent for international stocks. Plus, it takes just $1,000 to become a shareholder of this fund, making it a great place to start for investors on a budget.
With about $3 trillion in global assets under management at the end of 2014, Vanguard is one of the largest and best performing mutual fund companies in the world, offering size and stability. While it holds fewer assets than BlackRock, its funds have performed slightly better with trailing returns at 3.7 percent for 2015 to date, 13.5 percent for the past three years and 11.9 in the past five.
Here’s a breakdown of its annual returns over the past five years:
- 2011: 2.5 percent
- 2012: 12.6 percent
- 2013: 18.9 percent
- 2014: 9.1 percent
- 2015: 3.7 percent
The higher returns earned in Vanguard make sense, as this family fund has well over half its assets in stocks, at 62.6 percent. The Vanguard family funds also have just over a third (33.8 percent) in bonds and 2.6 percent in cash.
In addition to earning higher returns, Vanguard’s investors also keep more of them thanks to the family fund’s very low expense ratios. Fees start at an expense ratio of just 0.13 percent for taxable bonds and range up to 0.23 percent on international stocks. You’ll need a minimum of $3,000 to start investing with Vanguard.
3. State Street Global Advisors
State Street Global Advisors is a stocks-heavy mutual fund family that has $2.4 trillion assets under management. The asset manager offers below-average fees, with an average expense ratio of 0.73 on domestic stocks, 1.00 percent on international stocks and 0.63 percent on taxable bonds. Investors can join this fund with a $2,000 minimum investment.
State Street invests more heavily in share markets, with nearly a quarter (73.8) assets held in stocks. Bonds account for 19.4 percent of assets while cash and other investments are 3.4 percent each. This focus on the stock markets has helped State Street earn higher returns on par with Vanguard: 4.2 percent to date, 13.7 three-year trailing returns and 10.3 percent over five years.
A closer look at the yearly earnings breakdown, however, shows that these higher returns have also been offset by heavy losses in 2011 — Vanguard earned 2.5 percent that year, BlackRock lost only 0.7 percent, and State Street investors saw a total loss of 10.8 percent (though that was more than earned back in 2012).
Here are the total State Street returns for the past five years:
- 2011: -10.8 percent
- 2012: 16.5 percent
- 2013: 15.0 percent
- 2014: 6.4 percent
- 2015: 4.2 percent
4. Fidelity Investments
Fidelity Investments offers 576 mutual funds, currently has $1.8 billion mutual fund assets under management and manages a little over $2 billion total assets. Fidelity also boasts some of the highest trailing returns of any major mutual fund company, at 12.5 percent for five-year returns, 14.6 percent for three-year returns and 5.1 percent for 2015 to date. Here’s how those returns breakdown by year:
- 2011: -1.3 percent
- 2012: 14.2 percent
- 2013: 21.4 percent
- 2014: 7.9 percent
- 2015: 5.1 percent
The portioning of Fidelity’s asset allocation is similar to Vanguard’s, with 67.2 percent of assets in stocks, 24.6 percent in bonds and 6.1 percent in cash.
It takes a minimum of $2,500 to invest with Fidelity. Fees are average for some classes, but they’re below average on domestic stock (0.97 percent) and municipal bond assets (0.69 percent).
5. BNY Mellon Funds
The BNY Mellon family fund has $1.7 trillion assets under management, and if you want to add your assets to that number you’ll need a hefty $10,000 minimum investment. But, BNY Mellon’s expense ratios are below average (except for international stocks, for which the expense ratio is average), according to Morningstar, providing stability and decent returns with fewer costs than most mutual fund companies.
BNY Mellon’s yearly returns for the past five years are as follows:
- 2011: -3.1 percent
- 2012: 10.6 percent
- 2013: 10.5 percent
- 2014: 5.0 percent
- 2015: 3.2 percent
BNY Mellon’s trailing returns are 8.8 percent for the past three years and 7.55 for the past five. BNY Mellon’s returns might be more modest than others on this list, and that’s largely due to its assets allocation, which has 54.1 percent in stocks and 43.3 percent in bonds, a near-even distribution.
With this index, however, BNY Mellon targets steady returns with fewer fluctuations, so this might be a good mutual fund family for an investor with low risk tolerance who gets uncomfortable with wide swings in losses and gains.
6. Allianz Funds
Allianz Funds has more than $2 trillion worth of assets under management as of December 2014 and a similar asset allocation profile to State Street. It has 71.4 percent of assets in stocks, 16.8 percent in bonds and 6.9 percent in cash, with another 4.9 in other asset classes. Like State Street, this has allowed Allianz to see some impressive returns, though without the deep 2011 dip that State Street took.
Here’s the breakdown of Allianz’s yearly total returns in the past five years:
- 2011: -0.1 percent
- 2012: 13.7 percent
- 2013: 26.6 percent
- 2014: 5.1 percent
- 2015: 3.2 percent
With this total returns history, Allianz’s trailing returns stand at 15.8 percent on a three-year basis, and 13.2 percent over the past five years. Higher returns might be offset by its less-competitive expense ratios, however, which Morningstar rates as average across the board (1.29 for domestic stocks and 1.37 percent for international stocks). Allianz’s mutual funds family is also very accessible, requiring a minimum investment of just $1,000.
JPMorgan is another mutual fund that offers accessibility with the same $1,000 starting investment requirement and charges average expense ratios across asset classes. As of December 2014, JPMorgan had $1.7 trillion assets under management.
Trailing returns at JPMorgan were at 10.4 percent over the past three years, and 9.1 over five years. Here’s a year-by-year overview of JPMorgan’s mutual fund returns dating back to 2011:
- 2011: 1.8 percent
- 2012: 10.8 percent
- 2013: 14.2 percent
- 2014: 6.6 percent
- 2015: 3.4 percent
JPMorgan offers investors a fund with fairly balanced asset allocation, currently holding 59.4 percent of assets in stocks, 30.2 percent in bonds, 8.9 percent in cash and 1.4 in other securities.
8. Wells Fargo Advantage Funds
As part of its many banking products and services, Wells Fargo also offers mutual funds under the name Wells Fargo Advantage Funds. This mutual fund family offers a well-rounded asset allocation, with 58.3 percent of assets in stocks, 32.4 percent in bonds, 7.3 percent in cash and 1.9 percent in other securities.
Wells Fargo Advantage’s costs are average, with its expense ratio at 1.27 percent on domestic stocks. A minimum $1,000 investment is all it takes to become a shareholder of this mutual fund.
Wells Fargo Advantage’s trailing returns were 9.2 percent for the past three years and 8.7 percent over the past five. Yearly returns during that period are similar to those earned by the JPMorgan mutual fund family, though the latter has slightly outperformed Wells Fargo Advantage in the past two years:
- 2011: 1.1 percent
- 2012: 10.3 percent
- 2013: 14.0 percent
- 2014: 4.1 percent
- 2015: 2.8 percent
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9. Deutsche Asset & Wealth Management
Deutsche Asset & Wealth Management is another respected mutual fund family and has a similar profile to Wells Fargo Advantage. The minimum investment is $1,000 and expense ratios are average (1.25 percent for domestic stocks).
The Deutsche mutual fund family has trailing three-year returns at 9.2 percent and five-year returns of 8.5 percent. Its five-year return performance is as follows:
- 2011: 1.1 percent
- 2012: 11.3 percent
- 2013: 9.5 percent
- 2014: 8.0 percent
- 2015: 2.4 percent
Asset allocation at Deutsche Asset & Wealth Management also resembles the Wells Fargo Advantage fund. It holds 56.5 percent of assets in stocks, 35.4 percent in bonds, 5.7 percent in cash and 2.4 percent in other securities.