Best Performing Mutual Funds

Mutual funds are popular investment tools that allow you to access instant diversification and professional fund management as an individual investor. Understanding which mutual funds have shown the best returns can help guide you toward your investment goals. Read on to learn more about the top-performing mutual funds and how you can use mutual fund investing to complement your overall long-term portfolio growth. 

Quick Look at the Best Performing Mutual Funds:

• Fidelity Advisor Growth Opportunities A
• Pax Large Cap Fund Individual Investor
• Goldman Sachs Large Cap Core Fund Class A
• Payson Total Return Fund
• Pear Tree Quality Fund

Best Performing Mutual Funds

While the best-performing mutual fund might vary depending on the timeframe you’re measuring results in, the following are some of the mutual fund investments with the most consistent growth and return rates. 

1. Fidelity Advisor Growth Opportunities A 

The Fidelity Advisor Growth Opportunities A fund is one of the top-performing mutual fund investments when measured on a five-year time scale, with an average return rate of 20.75%. The fund invests primarily in individual common shares of stock issued by companies within the technology and consumer services industries. Managers of this fund focus on investing in both domestic and foreign growth stocks. Some of the largest holdings in the fund include investments in Microsoft Corp. (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOG) Class C, Amazon.com Inc. (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL). 

2. Pax Large Cap Fund Individual Investor

The Pax Large Cap Fund is another top-performing mutual fund, having seen a return rate of about 17% over the last five years. The fund’s primary investments are in the technology, healthcare and financial services sectors. Some of the fund’s largest investments are in shares of Microsoft, Apple, Alphabet Inc. (NASDAQ: GOOGL) Class A and Proctor & Gamble Co. (NYSE: PG). Under normal conditions, managers of the Pax Large Cap Fund invest at least 80% of the fund’s assets into companies that are part of the S&P 500 when measured by market capitalization. 

3. Goldman Sachs Large Cap Core Fund Class A

The Goldman Sachs Large Cap Core Fund has seen a total return of 16.42% in the last five years. The fund invests 90% of its assets into equities; though fund managers prioritize U.S.-based securities, they may invest up to 25% of the fund’s total assets in foreign securities. These foreign securities may include investments in countries with emerging markets and investments held in local currencies. 

4. Payson Total Return Fund 

The Payson Total Return Fund has seen a five-year return of 16.22%, making it another of the top-performing mutual funds. The fund invests primarily in the healthcare, technology and financial services sectors. Fund managers invest assets primarily in shares of common stock of large- and mid-capitalization domestic companies. The majority of companies that make up the Payson Total Return Fund have market capitalizations between $2 billion and $12 billion. 

5. Pear Tree Quality Fund

The Pear Tree Quality Fund has seen a return of 16.03% over the last five years. The fund invests primarily in the financial, technology and consumer cyclical sectors. About 80% of the fund’s assets are held in equity securities issued by companies with a total market capitalization of at least $5 billion. Some of its largest investments are in common shares of Microsoft, Apple and UnitedHealth Group Inc. (NYSE: UNH).

What is a Mutual Fund?

A mutual fund is a type of professionally managed investment instrument that allows you to pool your investment funds with other investors to purchase a group of hand-selected securities. While most mutual funds are made up of stock and exchange-traded fund (ETF) investments, the mutual fund you invest in might also include additional securities like bonds and money market instruments. 

Mutual funds are set up and maintained by professional portfolio managers who allocate the fund’s resources according to the detailed goals of the fund. There are multiple types of mutual funds, each of which has its own objective, volatility, investment strategy and asset allocation.

When you invest in a mutual fund, you have the opportunity to access a portfolio of professionally managed investments as an individual investor. Though most mutual funds have a minimum initial required contribution to buy into the fund, these minimums are significantly lower than the dollar amount you’d need to invest as a private investor with a personal financial manager. The total gain or loss you see when you invest in a mutual fund is proportional to the total amount of money that you’ve invested within the fund itself.

In exchange for managing the fund, mutual funds charge annual fees. Most mutual funds list annual fees in terms of the fund’s expense ratio, which describes what percentage of the fund’s assets are used for administrative purposes. In some cases, a mutual fund might also charge a commission paid to the managers of the fund. These expenses can cut into the total return on your investment, so be sure that you understand what expenses you’ll incur before you invest in any type of mutual fund. 

How Do Mutual Funds Impact Your Portfolio?

Mutual funds are the most common investment option for employer-sponsored retirement accounts because they provide a number of benefits for your long-term financial planning process. Some of the ways mutual funds may influence your portfolio include:

• Enhanced diversification: When you diversify an investment portfolio, you invest in multiple types of assets and investment classes to spread your risk between more than a single company or investing sector. Experts recommend you diversify your portfolio because it limits the risk of loss while improving overall returns when you take a long-term approach to saving and investing. Because mutual funds essentially bundle a collection of individual assets together with a single investment, they provide individuals with a quick and easy way to diversify their portfolio without selecting individual stocks.
• Professional management: A primary benefit of mutual funds over other types of investments is that the fund is actively managed by financial professionals. Instead of selecting individual investments you think will help you toward your goal, you can compare the stated goals of multiple mutual funds to select an investment option that meshes with your needs as an investor. Minimum investment amounts for mutual funds are lower than what you’d need to invest through a personal financial manager, providing individuals with a more affordable way to access professional investment management services.
• Fees: Unlike when purchasing individual stocks, bonds and other types of portfolio investments, fees come along with expense ratios that are charged in exchange for management services. In some cases, these fees can make a major dent in the returns you see from your investment in the mutual fund. Be sure to carefully consider the expense ratio and any commissions you’ll pay when investing in a mutual fund before you add it to your portfolio. 

How Do Mutual Funds and ETFs Differ?

Both mutual funds and ETFs provide individual investors with an accessible and affordable way to buy a bundle of securities with a single purchase. The majority of both mutual funds and ETFs have between 100 and 3,000 individual securities in them, and both assets are regulated by major financial oversight bodies like the Securities and Exchange Commission (SEC). While the concept of pooled investments is the same on both products, mutual funds and ETFs also differ in the following ways.

• Fees: While you might pay a commission through your broker when buying and selling ETFs, these funds do not come with the same type of expense ratios you’d expect from a mutual fund. If your ETF has an expense ratio, it usually will be much lower than comparable mutual funds because ETFs are typically passively managed. As many brokers have gotten rid of commission requirements on ETF purchases and sales, this feature makes ETFs cheaper overall than investing in mutual funds.
• Trading times: The value of a mutual fund is calculated at the end of each trading day based on the fund’s net asset value (NAV). When you place an order to buy shares of a mutual fund, your order is not executed in real time like when you place an order to buy shares of stock. Instead, your broker will fill your order at the end of the trading day based on the fund’s NAV at the time of closing.

ETFs, on the other hand, trade in much the same way as individual shares of stock. You can buy and sell ETFs throughout the day, and it’s possible to employ short-term trading strategies (like swing trading or scalping) with these assets. If you use an active investment strategy, you’ll want to invest in ETFs over a mutual fund portfolio thanks to their lower fees and regular trading hours. 

Incorporating both ETFs and mutual funds can help you create a more diversified long-term investing portfolio. 

Compare Online Brokers for Mutual Funds

Before you can buy or sell shares of mutual funds, you’ll need to create an account with a broker. Benzinga offers insights and reviews on the following brokerage options. You may want to consider beginning your search using a few of the links below.  

Frequently Asked Questions