It has outperformed the S&P 500 over the past 10 and 15 years. It also offers a dividend payout that recently yielded about 1.9%. The Vanguard Dividend Growth fund features a low expense ratio, a relatively low turnover ratio of 26%, and an investing style open to both "growth" and "value" holdings.Each sports a relatively low expense ratio, no load, an above-average track record, and five stars from the fund-watching folks at Morningstar: Here are a few mutual funds you might want to consider. The respected Vanguard 500 Index Fund ( NASDAQMUTFUND:VFINX), for example, is an index fund based on the S&P 500, holding some $229.2 billion in assets and sporting a low expense ratio of 0.16%. The SPDR S&P 500 ETF ( NYSEMKT:SPY) charges even less - just 0.09%. Or just stick with index fundsįinally, remember that if it seems like a lot of work to find, invest in, and then keep an eye on a handful of promising mutual funds, you can just opt to invest in index funds instead. A five-year annual average of 6% may not seem exciting unless you see that the benchmark averaged just 3.7% in the same period. That might not be a dealbreaker, but it's good to be aware of.Īlso, compare the fund's performance to its benchmark, such as the S&P 500 for large-cap-oriented funds or the Russell 2000 index for small-cap funds. Why? Well, because there might have been an extremely strong or weak performance that pushed the average up or down significantly. For example, it's good not only to check out, say, its 10-year average annual return but to also try to view each of those years' results. That's reasonable, but assess a fund's record carefully. One of the first things that many investors look for in a fund is a strong performance record. What kind of fees are reasonable, then? Well, you can find many index funds that passively track various stock indexes charging just 0.25% or less and among all stock funds, the average expense ratio in 2015 was 1.31%.Here are the average fees of several different kinds of funds as of 2015, according to the Investment Company Institute and Lipper: If you invest $10,000 in each and they both grow by 10% annually, in 20 years, the first one will leave you with about $60,300, while the second holding will be worth $50,200 - more than $10,000 less! Imagine, for example, two equally compelling mutual funds, one of which sports an "expense ratio" (essentially its annual fee) of 0.60%, while the other charges 1.60%. Seek low feesįirst off, seek low fees, because even seemingly small differences can make a difference of tens of thousands of dollars. Here are some tips that can help you zero in on the best mutual funds. If you've been meaning to pay more attention to your personal finances and invest in very promising mutual funds, then read on. This article was updated on June 8, 2016, and originally published on Jan. Follow fund managers pool their investors' money and invest it according to their strategy. For more financial and non-financial fare (as well as silly things), follow her on Twitter. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics.
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