When shopping for mutual funds, we naturally are curious: Which ones are performing the best today? Show
While that’s a common place to begin your search, remember you’re shopping for tomorrow when looking for the best mutual funds. Top performers in the short term don’t always become long-term winners. The best mutual funds for your portfolio won’t necessarily be the best for your parents, your siblings or your neighbors. Best-performing U.S. equity mutual fundsTo determine the best mutual funds measured by five-year returns, we looked at U.S. equity funds open to new investors with low costs (expense ratios of 1% or less) and minimum investment requirements of $3,000 or less.
Data current as of Jan. 3, 2023, and is for informational purposes only. Retirement and institutional funds were excluded. How to choose the best mutual funds for youNerdWallet’s recommendation is to invest primarily through mutual funds, especially index funds, which passively track a market index such as the S&P 500. The mutual funds above are actively managed, which means they try to beat stock market performance — a strategy that often fails. When you're ready to invest in funds, here's what to consider:
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Average mutual fund returnManaging your portfolio also means managing your expectations, and different types of mutual funds should bring different expectations for returns. Stock mutual funds = higher potential returns (or losses)Stock mutual funds, also known as equity mutual funds, carry the highest potential rewards, but also higher inherent risks — and different categories of stock mutual funds carry different risks. For example, the performance of large-cap high-growth funds is typically more volatile than, say, stock index funds that seek only to match the returns of a benchmark index like the S&P 500. (Learn more about stock mutual funds versus index funds.) Bond mutual funds = lower returns (but lower risk)Bond mutual funds, as the name suggests, invests in a range of bonds and provide a more stable rate of return than stock funds. As a result, potential average returns are lower. Bond investors buy government and corporate debt for a set repayment period and interest rate. While no one can predict future stock market returns, bonds are considered a safer investment as governments and companies typically pay back their debt (unless either goes bust). Money market mutual funds = lowest returns, lowest riskThese are fixed-income mutual funds that invest in top-quality, short-term debt. They are considered one of the safest investments you can make. Money market funds are used by investors who want to protect their retirement savings but still earn some interest — often between 1% and 3% a year. (Learn more about money market funds.) Focus on what mattersChasing past performance may be a natural instinct, but it often isn't the right one when placing bets on your financial future. Mutual funds are the cornerstone of buy-and-hold and other retirement investment strategies. Hopping from stock to stock based on performance is a rear-view-mirror tactic that rarely leads to big profits. That's especially true with mutual funds, where each transaction may bring costs that erode any long-term gains. What's important to consider is the role any mutual fund you buy will play in your total portfolio. Mutual funds are inherently diversified, as they invest in a collection of companies (rather than buying stock in just one). That diversity helps spread your risk. You can create a smart, diversified portfolio with just a few well-chosen mutual funds or exchange-traded funds, plus annual check-ins to fine-tune your investment mix. Neither the author nor editor held positions in the aforementioned investments at the time of publication. Is a high YTD return good?A high YTD return means that the portfolio is generating an increase in value when compared to the start of the year.
What is a good annual rate of return?According to conventional wisdom, an annual ROI of approximately 7% or greater is considered a good ROI for an investment in stocks. This is also about the average annual return of the S&P 500, accounting for inflation. Because this is an average, some years your return may be higher; some years they may be lower.
How do you read a YTD return?Year to date (YTD) is a term that covers the period between the beginning of the year and the current (present) date. So, on a pay stub, your YTD figure shows the total of your wages or earnings from the start of the current calendar year until the most recent pay period.
What is the YTD stock market return?Year-to-date (YTD) performance refers to the change in price since the first day of the current year. For example, if a stock ends the previous calendar year trading for $50 per share and is worth $60 at the end of June, the return (assuming the stock paid no dividends) is $10 or 20%.
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What is a good YTD return?
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