Whether you are on the cusp of retirement or just entering the workforce, it is essential to think carefully about sustainable investment options that serve your long-term financial goals. The best mutual funds on the market in 2018 provide investment opportunities for various situations, but you must have a clear understanding of your own financial goals and find an acceptable degree of reconciliation between those goals and the objectives of a mutual fund's management team.
For older investors this will generally mean investing in stable state sponsored equities that preserve wealth instead of growing it and pay dividends regularly to supplement a fixed income. Younger investors can find funds in which they can invest in tax-free bonds via an IRA or mutual funds that invest in riskier, and more profitable, common stocks.
Comparison Table
PRODUCT NAME | IMAGE |
|---|---|
Opportunistic Income A |  Image Source : Brand Like A Rockstar |
GMO Opportunistic Income VI |  Image Source : GMO |
Blackrock Allocation Target Shares Fund |  Image Source : Teletrader |
Colorado Bond Shares Tax-Ex |  Image Source : sec.gov |
T.Rowe Price Japan |  Image Source : Dg Publishing |
Mutual Fund FAQ
1. What Are The Most Common Features Of The Best Mutual Funds?
It is difficult to identify any underlying similarities among the best mutual funds because each fund seeks to capitalize its assets on behalf of a specific asset class by cornering a specific segment of the market. Therefore, if we are going to find something they all have in common that goes beyond the superficial, it would have to be by looking at the advantageous position of any given fund within whichever market segment it serves.
2. What Differentiates The Best Mutual Funds?
Image Source : pixabay
As we mentioned above, asset class and investment goals are the major factors that determine a mutual fund's investment strategy and clarify the relevance of one of the best mutual funds in reference to your investment portfolio and your financial needs.
We reviewed multiple mutual funds with a fixed income investor class, meaning the fund seeks to provide dividend income and capital preservation, which is appealing to retired investors who have already saved for retirement and need to stretch their nest egg as far as it will go, while still receiving monthly dividend income. Other funds are meant to provide an investment opportunity for working people who still need to grow their investment capital before retirement is on the table.
3. How Do I Determine Which Fund Is Best For Me?
Image Source : pixabay
Ask yourself what your investment goals are. If you need to grow your investment capital and plan to spend decades more in the workforce, you can take more risks in an aggressive fund and try to make some larger gains because you have time to compensate should any riskier investments fail to pan out.
If you are retired or soon to be retired, you will be on a fixed income in the near future in which case you should prioritize conservatism. This typically means investing in bonds which are backed by a Central Bank and finding a fund that pays dividend income regularly so you can supplement retirement and/or social security distributions.
4. Where Can I Buy One Of The Best Mutual Funds?
Image Source : pexels
Most of the best mutual funds on the market can be purchased directly from the companies that manage those mutual funds. In some cases, you can access different mutual funds through the services available at your bank or financial institution. Some of the cheapest investment options are available exclusively online because companies cut costs by relying on a bare bones staff.
5. What Are The Advantages Of The More Expensive Of The Best Mutual Funds?
Image Source : pixabay
The more expensive products we reviewed for this article did not necessarily offer investors access to higher average yields. The more expensive products were able to provide investors with greater exposure to idiosyncratic segments of the global market but not more income. In fact, the cheapest mutual fund we reviewed for this article was one of the most successful.
How We Reviewed
We reviewed five of the best mutual funds on the market using media coverage of the financial industry, analysis available through market indexes like the S&P 500 or NASDAQ, and information furnished by organizations that work in the same sector like TD Ameritrade, Charles Schwab, and T. Rowe Price. We cross-referenced all our sources to resolve any discrepancies and ensure editorial certainty.
We paid particularly close attention to the asset class of each of the best mutual funds and how the funds served their investors in line with stated investment goals. We reviewed the annual and onetime costs of each fund in reference to the performance of all the investment products we reviewed.
Overall Price Range Of This Product (And Similar Products)
The most expensive product we reviewed for this article was the GMO Opportunistic Income VI Fund, which has a reasonable expense ratio but a deliberately unclear minimum of investment capital that seems to be in an entirely unrealistic amount. The BlackRock Allocated Target Shares Fund, on the other hand, charges investors a tiny percentage of investment capital in any amount.
It is worth noting that the performance of a fund is not necessarily tied to the expense of investing with a particular fund. More expensive investment products are correlated with a broader spectrum of potential market exposure, but the proliferation of algorithm-based investment tools means investors have access to very low-cost investment options with a strong upside regardless of how much capital they have to invest.
What We Reviewed
Opportunistic Income A
Image Source : Brand Like A Rockstar
Features
The SEI Institutional investments Trust (SIIT) Opportunistic Income Fund is an open-end mutual fund composed almost entirely of US government backed bonds, bonds backed by foreign governments, and corporate debt securities. The fund is heavily invested in bonds to provide a stable investment option seeking capital appreciation and income primarily on behalf of investors on a fixed income.
If you can stomach the minimal initial investment of $100,000 and an additional annual contribution of at least $1,000, you will have access to an attractive trailing twelve months (TTM) yield above 4% and a rock-bottom .24% expense ratio. Don't let the low 10-year returns scare you away from this fund. Like most funds, the Opportunistic Income Fund took a big hit in '08 that skewed their averages. The funds five-year returns outperform aggregate US bonds.
Pros
Cons
Performance
Since 2013, the SIIT Opportunistic Income Fund has returned roughly 3% annually, with a five-year average just below that figure.
GMO Opportunistic Income VI
Image Source : GMO
Features
The GMO Opportunistic Income VI Fund leverages a total of $1.1 billion in assets in what is called the nontraditional bond market. Nontraditional bond investments must employ a "divergent" investment strategy, which the fund does by investing in securitized bonds: pools of contractual debt in the form of mortgages, car loans, and other lines of credit which are sold to a third party so the third party can secure the monthly cash flow commensurate with the debt in the bond.
Despite taking a huge hit to its share price in 2018, the fund is still rated highly by analytical organizations that cover the financial sector. Should you choose to invest in the GMO Opportunistic Income VI Fund; best of luck. Inclusion is clearly not a priority for the fund based on the deliberate dearth of available information and an ambiguous range of minimum initial investment requirements in the hundreds of millions of dollars. It is safe to say that investment is by invitation only.
Pros
Cons
Performance
The GMO Opportunistic Income Fund VI is consistently able to keep its TTM yield above 3% and has a five year average annual yield to in line with that figure.
BlackRock Allocation Target Shares Fund
Image Source : Teletrader
Features
Similar to the GMO Opportunistic Income VI Fund, the BlackRock Allocation Target Shares Fund seeks to leverage $831 million in assets to secure a high level of income for investors who prioritize capital preservation and prefer to receive monthly distributions of dividend income derived from their investment capital. The fund uses securitized bonds to ensure monthly cash flow through mortgage- and asset-backed securities. Thus far, this "divergent" strategy has garnered impressive TTM yields.
This fund is perfect for investors at or near retirement age who need to preserve and grow a nest egg with minimal administrative and managerial fees. With no minimum initial investment and a rock bottom .01 expense ratio, investors pay just $3 annually for every $10,000 they invest with BlackRock.
Pros
Cons
Performance
Since its inception in 2015, BlackRock's Allocation Target Shares Fund has an average annual yield of almost 6.5% every year, pushing the fund's three cumulative return rate above 20%.
Colorado Bond Shares Tax-Ex
Image Source : sec.gov
Features
The Colorado Bond Shares Tax-Exempt Fund is geared toward investors with tax-free investment assets such as those commonly found in IRA accounts and other tax-sheltered retirement accounts. Because the bonds in this fund are specifically exempt from Colorado state income tax, this mutual fund is classified as a municipal single state interim fund. It has $1 billion in total assets ,most of which are held in tax-exempt obligations of various ratings. The fund is heavily invested in bonds tied to charter schools throughout Colorado.
With a minimal initial investment requirement of just $500, this fund is a great opportunity for investors seeking to grow their investment capital over the course of their professional lives. There is no better option on the tax-free bond shares market for investors with more than a decade left in the workforce.
Pros
Cons
Performance
Colorado Bond Shares ranks first among municipal single state interim funds with a TTM yield of more than 4% and a 10-year average annual return to reflect that accomplishment.
T. Rowe Price Japan
Image Source : Dg Publishing
Features
As the name implies, the T. Rowe Price Japan Fund consists exclusively of common stock in companies with headquarters in Japan or extensive operations in Japan. The fund had a rough 2014 but posted three consecutive years of market returns over 10% immediately thereafter to bring their 10-year average annual yield to more than 8.5%. This performance has warranted above average to high returns with only average to low risk.
The Japan Fund's expense ratio is a relatively high .97%, and the initial minimum investment is $2,500 with an additional $100 investment due each year. For investors interested in investing in the Japan Fund with tax-free IRA dollars, the minimum initial investment requirement is reduced to $1,000; but the additional $100 every year is still mandatory.
Pros
Cons
Performance
Over the last five years, T. Rowe Price's Japan Fund has outperformed Japanese market indexes with a TTM yield averaging nearly 9%.
The Verdict
Based on this review, it should be clear that the best mutual funds on the market are very different from one another, because each is designed specifically for a certain segment of the investment market. In broad strokes, if you are currently working and plan to be in the workforce for the foreseeable future, you are best off investing any tax-exempt retirement savings with the Colorado Bond Shares Tax-Exempt Fund, which is the best in its class.
Image Source : pixabay
For more cavalier young investors, T. Rowe Price's Japan fund presents the strongest opportunity to increase investment capital rapidly. If retirement is in the near future for you, don't let expensive options drag you away from the simple efficacy of BlackRock's Allocated Target Shares Fund which garners excellent returns at a nearly non-existent expense. Regardless of your situation, investing in a diversified mutual fund is almost always advisable.
Leave a Reply