Best Mutual Funds to Invest In

Find out the top mutual funds.

Mutual funds offer investors the benefit of a diversified portfolio and professional management of that portfolio. But all investment funds involve some level of risk, and not all mutual funds are created equal.

Whether your investment goals involve aggressive growth during your working years or a more conservative approach as you near retirement, one of these top-rated mutual funds could serve your financial strategy well. Here are the 20 best mutual funds to buy:

20 Best Mutual Funds for 2018
 Company Mutual Fund SymbolFund NameTypeExpense RatioTotal Assets5-Year Return
LGILXLaudus TrustLGILXLaudus U.S. Large-Cap Growth FundLarge-cap stock0.75%$1.72B13.08%
Charles Schwab logo 2017Schwab Capital TrustSWPPXSchwab S&P 500 Index FundLarge-cap stock0.09%$24.02B13.98%
Vanguard logo 2017Vanguard Index FundsVTSMXVanguard Total Stock Market Index Fund Investor SharesLarge-cap stock0.16%  $517.94B13.79%
IJHiShares TrustIJHiShares Core S&P Mid-Cap ETFMid-cap U.S. stock0.12%$36.6B14.17%
Vanguard logo 2017Vanguard Index FundsVOEVanguard Mid-Cap Value IndexMid-cap U.S. stock0.08%$13.73B14.9%
PRDMXT. Rowe PricePRDMXT. Rowe Price Diversified Mid-Cap GrowthMid-cap U.S. stock0.87%$601.94M12.94%
WisdomTree logo 2017WisdomTree TrustDESWisdomTree SmallCap Dividend FundSmall-cap U.S. stock0.38%$2.06B14.85%
Vanguard logo 2017Vanguard Horizon FundsVSTCXVanguard Strategic Small-Cap Equity FundSmall-cap U.S. stock0.29%$1.7B15%
Charles Schwab logo 2017Schwab Capital TrustSICNXSchwab International Core Equity FundInternational stock0.86%$755.99M8.47%
FAGIXFidelity Investment TrustFTEMXFidelity Total Emerging Markets FundInternational stock1.39%$228.94M3.62%
Dodge & Cox logo 2017Dodge & Cox FundsDODBXDodge & Cox BalancedBalanced mutual fund0.53%$15.38B12.67%
Vanguard logo 2017Vanguard Valley Forge FundsVBINXVanguard Balanced Index Fund Investor SharesBalanced mutual fund0.22%$31.36B9.01%
Vanguard logo 2017Vanguard Scottsdale FundsVSIGXVanguard Intermediate-Term Government Bond Index Fund Admiral SharesU.S. government bond0.07%$2.06B1.24%
FAGIXFidelity Income FundFGOVXFidelity Government Income FundU.S. government bond0.45%$4.45B1.33%
Vanguard logo 2017Vanguard Bond Index FundsVBLTXVanguard Long-Term Bond IndexInvestment grade bond0.16%$9.52B3.8%
TGCFXTCW FundsTGCFXTCW Core Fixed Income IInvestment grade bond0.49%$1.72B2.47%
FAGIXFidelity Summer Street TrustFAGIXFidelity Capital & IncomeHigh-yield bond0.74%$10.83B7.89%
Vanguard logo 2017Vanguard Fixed IncomeVWEHXVanguard High-Yield Corporate FundHigh-yield bond0.23%$21.78B6.12%
FLAAXNuveen Municipal TrustFLAAXNuveen All-American Municipal Bond ATax-exempt bond0.70%$3.21B4%
Vanguard logo 2017Vanguard Specialized FundsVGSIXVanguard REIT Index Fund Investor SharesREIT0.26%$62.48B10.22%

The Top 20 Best Mutual Funds to Invest In

To help you identify strong mutual funds to invest in for your retirement plan or other financial goals, check out these best-performing mutual funds along with a breakdown of their assets, types of investments, expense ratios and historical returns based on reports from Yahoo Finance. Choose from the 20 top-rated mutual funds:

Laudus US Large-Cap Growth Fund (LGILX)

LGILX is a long-term, top-performing mutual fund with a 10-year average return of 9.37 percent. The fund’s holdings are concentrated in the technology, healthcare and consumer discretionary sectors, with Amazon (AMZN), Google (GOOGL) and Microsoft (MSFT) accounting for nearly 20 percent of assets.

Other significant holdings include UnitedHealth Group (UNH), Netflix (NFLX), Facebook (FB) and Visa (V). The fund invests at least 80 percent of its net assets in equity securities of large U.S. companies with a market capitalization of at least $3 billion at the time of investment. Investors seeking to beat market returns might consider this large-cap growth fund that’s actively managed.

Schwab S&P 500 Index Fund (SWPPX)

SWPPX attempts to track the returns of the Standard & Poor’s 500 index. As one of the top mutual fund companies, Schwab offers this index fund that invests at least 80 percent of its net assets in stocks represented in the S&P 500 in the same weight as the index. To minimize the return gap between the fund and the index, the fund might also invest in managed futures contracts. This fund provides a core holding for a diversified investment portfolio.

See: ETF vs. Mutual Fund — How to Choose Your Investments

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)

In the broad-based index fund category, this is one of the best index funds for individuals interested in investing in mutual funds. Created in 1992, VTSMX mirrors the entire U.S. stock market, including small-, mid- and large-cap growth and value stocks. Vanguard, a top mutual fund company, claims that low costs, broad diversification and tax efficiency are what make this fund so popular — accounting for $517.94 billion total assets under management.

iShares Core S&P Mid-Cap ETF (IJH)

Last year, investors in mid-cap index fund IJH enjoyed an outsized 30.07 percent return, handily beating the Mid-Cap Blend sector’s 12.85 percent return, according to Morningstar. iShares Core S&P Mid-Cap EFT fund seeks to represent the S&P Mid-Cap 400 index. The company touts IJH’s quality combined with its low cost of only 0.07 percent. A major appeal of the fund is in creating a core portfolio of investments seeking long-term growth while keeping fees low and seeking tax efficiencies.

Vanguard Mid-Cap Value Index (VOE)

Value funds are popular among investors looking for a deal. Value stocks are defined as the stock of companies that might be temporarily undervalued by investors. These companies tend to be fundamentally sound, but for some reason their stock price hasn’t kept pace with their market sector. Value funds, such as the Vanguard Mid-Cap Value Index, seek to capitalize on the underlying growth potential of these companies. Vanguard Value Index managers seek to track the performance of the CRSP U.S. Mid-Cap Value Index, which measures the investment return of mid-capitalization value stocks.

Related: Index Funds vs. Mutual Funds

T. Rowe Price Diversified Mid-Cap Growth (PRDMX)

PRDMX’s objective is to provide long-term capital growth through investing in growing mid-cap firms with projected fast-earnings growth. Although it might have a greater risk than investing in more conservative large-scale companies, it offers the potential for greater rewards.

WisdomTree SmallCap Dividend Fund (DES)

DES is designed to track the investment returns of the U.S. dividend-paying small-cap firms. The top four holdings are Vector Group Ltd. (VGR), CVR Energy Inc. (CVI), Covanta Holding Corp. (CVA) and Pattern Energy Group (PEGI). Small-cap companies that pay dividends represent strong firms and are an important component of long-term returns for this asset class, according to the Royce Funds, a small-cap investing specialist.

Vanguard Strategic Small-Cap Equity Fund (VSTCX)

VSTCX seeks long-term capital appreciation through investments in small-capitalization domestic equity securities based on the fund advisor’s assessment of the securities’ relative return potential. The fund advisor will attempt to create an appropriate balance of securities that represents strong growth potential while representing reasonable valuations relative to their industry peers.

Small capitalization firms might be more volatile than larger-cap companies, so returns can be harder to predict, according to Vanguard. Mutual fund rating company Morningstar measures VSTCX’s risk level as average in its category and assigned the fund a three-star investment rating.

Related: The Best Online Stock Brokers for Beginners

Schwab International Core Equity Fund (SICNX)

SICNX, a diversified international stock fund, strives for income and capital appreciation. It invests the majority of its funds in more developed markets, and the rest in emerging markets. Thus, this fund is suitable for investors comfortable with a certain level of risk that might arise from changes in interest rates, currency exchange rates as well as economic and political circumstances.

Fidelity Total Emerging Markets Fund (FTEMX)

FTEMX, an actively managed, balanced emerging markets fund, has exposure to both stocks and bonds from countries with low- to middle-income economies. The fund invests approximately 60 percent of the fund assets in equities and 40 percent in debt securities of all quality levels. The fund managers examine the company’s structure, price, liquidity, economic risk and more. FTEMX is a riskier fund, appropriate for investors looking to tap into the international sector.

Read: The Best Investment Brokers

Dodge & Cox Balanced (DODBX)

Founded in 1931, this actively managed, best-balanced fund has a long history. It strives for income, conservation of principal and growth. These goals are accomplished with diversified holdings of stocks and bonds. The fund managers use a value-based approach and seek to invest in firms with long-term positive prospects and current low valuations.

The fund owns between 25 and 75 percent in equities and the remainder in debt securities. Managers evaluate the company’s financial strength, competitive advantage, business quality, reputation and more.

Vanguard Balanced Index Fund Investor Shares (VBINX)

VBINX, a low-fee Vanguard fund, offers investors a one-stop mutual fund with access to the entire financial market. Approximately 60 percent is invested in a representative sample of the U.S. stock market and 40 percent in bonds tracking the U.S. bond market. The fund is a comprehensive investment and is a suitable core holding in a diversified portfolio.

Vanguard Intermediate-Term Government Bond Index Fund Admiral Shares (VSIGX)

VSIGX is one of the best bond funds in our ranking. The fund gives investors exposure to the fixed-income markets, spanning the U.S. Treasury, U.S. government agencies and foreign debt that’s guaranteed by the U.S. government. The underlying debt has maturities between three and 10 years. Although the fund’s principal value might vary with changes in interest rates, the default risk for U.S.-related debt is negligible. In other words, it’s unlikely that the U.S. will go bankrupt. This fund offers investors an opportunity to participate in the U.S. government debt markets with one fund.

Related: Mutual Funds vs. Index Funds – Which is the Better Investment?

Fidelity Government Income Fund (FGOVX)

This diversified government bond fund strives to provide high income and preserve capital. The fund invests at least 80 percent of its funds in U.S. government securities and other debt instruments related to the U.S. government. With 20 percent of its assets, the fund might use more complex and risky investment leverage strategies. The fund’s value might go up or down depending upon changes in interest rates, as bond values tend to fall as interest rates increase.

Vanguard Long-Term Bond Index (VBLTX)

Long-term bonds offer investors the opportunity for higher fixed-income returns with the downside of greater volatility. This ultralow-fee, long-term bond fund gives investors broad exposure to U.S. investment-grade bonds with maturities longer than 10 years. Approximately 60 percent of assets are in corporate bonds and 40 percent are allocated to longer-term U.S. government bonds.

Learn: The Best Robo-Advisors

TCW Core Fixed Income I (TGCFX)

The fund invests in all corners of the fixed-income debt markets, including government, corporate, asset-backed and mortgage-backed securities. TCW’s goal is to give investors maximum income and with better-than-average total long-term returns.

Fidelity Capital & Income (FAGIX)

FAGIX is an average-risk bond fund that strives for higher income by investing in both equity and debt securities. The fund includes investments in defaulted securities and emphasizes lower-quality and troubled debt in an attempt to obtain higher returns.

Vanguard High-Yield Corporate Fund (VWEHX)

The Vanguard high-yield or “junk bond” fund invests in medium- and lower-quality corporate bonds. Created in 1978, this actively managed bond strives to capture consistent income. Similar to Fidelity’s high-yield bond fund, this investment is appropriate for investors willing to take on additional risk in exchange for a potentially higher yield.

Nuveen All-American Municipal Bond A (FLAAX)

FLAAX is an actively managed U.S. municipal bond fund that’s appropriate for high-tax-bracket individuals seeking federally tax-exempt income. The longer-term bond fund strives to preserve capital and provide a stream of tax-free income.

Vanguard REIT Index Fund Investor Shares (VGSIX)

VGSIX is a real estate index fund that invests in a variety of real estate investment trusts or companies that buy office buildings, hotels and other types of real estate. REITs can offer diversification to an existing stock and bond portfolio. REITs are required to pay out 90 percent of their annual income and might provide investors an income stream. As with stocks and bonds, REIT prices can also go up and down.

Click through to learn how to invest in the nine best index funds.

More on Investing

    Barbara Friedberg and Gabrielle Olya contributed to the reporting for this article.

    Methodology: To compile its ranking of the best mutual funds, GOBankingRates evaluated each institution’s historical returns, expense ratios, assets under management and its investment offerings based on reports from Yahoo Finance and individual investment companies.