There is a plethora of mutual funds out there that promise to work wonders for your portfolio. However, choosing among them can be a little difficult if you are not aware of the basic concept and working of mutual fund companies. Mutual funds are a good investment option for people of all age groups, especially those who have just landed a job.
A mutual fund is a collective investment vehicle which pools individual investments and creates a portfolio of securities. The returns from this are given back to the investors after the expenses of the fund are accounted for. The said portfolio is managed by a group of elite fund managers whose job it is to track the movement of the stock market, the value of the investments and find new avenues to invest. The total assets managed by a fund are called Assets Under Management or AUM, the total value of a funds holdings divided by the number of shares outstanding are termed Net Asset Value or NAV, this is the price at which one unit of a fund can be purchased or redeemed by investors.
So which are the funds that you should opt for in order to make your portfolio better. Let's take a look at some of the most promising funds for 2013.
Wells Fargo Advantage Core Builder Series M
Having performed well in 2012 with a healthy 1-year return of over 9%, this fund by Wells Fargo seems to be well-poised for some good results in 2013 as well. It is primarily focused on the municipal bond market with 60% of its assets invested in municipal securities which are exempt from federal income tax. The remaining assets are divided between low-grade municipal securities and corporate debt securities.
Vital Stats
- Total AUM: $53.99 Million
- NAV: $11.71
- Loads if any: None
- Company: Wells Fargo
- Primary Asset Allocation: Bonds (91%)
- YTD returns : 1.30%
- 1-year: 9.83%
- 3-years: 10.41%
- 5-years: N/A
- Rating:
Puerto Rico Electric Power Authority
Tennessee Energy Acquisition C Gas R
Houston Tx Airport System Rev Sub Lien
10yr Us Treasury Note Futures Mar13 Xcbt
Texas Mun Gas Acquisition & Su Rev Bd 5%
Harbor Capital Appreciation (Inv)
The fund focuses on long term capital appreciation, investing in companies typically having market capitalization of over $1 billion. The portfolio consists of mid-cap and large-cap companies which are expected to show above average growth.
Vital Stats
- Total AUM: $18.20 Billion
- NAV: $43.86
- Loads if any: None
- Company: Harbor Capital Advisors Inc
- Primary Asset Allocation: Stocks (98%)
- YTD returns : 4.41%
- 1-year: 7.12%
- 3-years: 12.33%
- 5-years: 5.70%
- Rating:
Apple Inc
Google Inc
MasterCard Incorporated
Amazon.com
Precision Castparts Corp
SunAmerica Focused Dividend Strategy C
It is a value based fund, aiming to provide steady dividend income to its investors and as a practice invests up to 80% of its assets in companies which provide regular dividend distribution.
Vital Stats
- Total AUM: $3.23 Billion
- NAV: $13.81
- Loads if any: Deferred @ 1%
- Company: Sunamerica Asset Management Corp
- Primary Asset Allocation: Stocks (98%)
- YTD returns : 6.96%
- 1-year: 15.58%
- 3-years: 14.97%
- 5-years: 8.98%
- Rating:
Kronos Worldwide, Inc
GameStop
Western Union Company
Southern Copper Corporation
Dell Inc
Principal MidCap Blend (Inst)
The fund aims to invest up to 80% of its securities in stocks of mid-cap companies, especially those which show promise in terms of growth and capital appreciation. As the economy recovers, the mid-cap companies will benefit the most as their share prices will go up, it is prudent to keep some investment in these companies to take advantage of the market conditions later.
Vital Stats
- Total AUM: $4.44 Billion
- NAV: $16.95
- Loads if any: None
- Company: Principal Management Corp
- Primary Asset Allocation: Stocks (99.49%)
- YTD returns : 8.15%
- 1-year: 20.08%
- 3-years: 20.60%
- 5-years: 9.67%
- Rating:
Liberty Media Corporation
Brookfield Asset Management
O'Reilly Auto Parts
Loews Corporation
Williams Companies, Inc
Vanguard Wellington (Inv)
The funds policies are attuned toward achieving a blend of stocks and bonds, in the typical 60/40 ratio. This fund provides both capital appreciation and an element of security to investors and in these turbulent times is a good way to secure your investment.
Vital Stats
- Total AUM: $67.89 Billion
- NAV: $35.33
- Loads if any: None
- Company: The Vanguard Group, Inc
- Primary Asset Allocation: Stocks (65.37%) Bonds (32.77%)
- YTD returns : 4.49%
- 1-year: 12.26%
- 3-years: 11.49%
- 5-years: 6.04%
- Rating:
Exxon Mobil Corporation
Wells Fargo & Co
Pfizer, Inc
JPMorgan Chase & Co
US Treasury Note 0.25%
Vanguard Dividend Growth
One of the best funds in this list, the Vanguard Dividend Growth aims to provide investors with regular dividend income, by investing in blue-chip stocks of top-rated companies. The fund has consistently given dividends and the YTD return is already a good 6 plus percent.
Vital Stats
- Total AUM: $12.70 Billion
- NAV: $17.76
- Loads if any: None
- Company: The Vanguard Group, Inc
- Primary Asset Allocation: Stocks (97.77%)
- YTD returns : 6.61%
- 1-year: 13.13%
- 3-years: 13.98%
- 5-years: 6.76%
- Rating:
Johnson & Johnson
PepsiCo, Inc
Occidental Petroleum Corporation
Exxon Mobil Corporation
Target Corporation
Robeco Long/Short Equity (Inv)
The primary goal of the fund is to provide long-term capital appreciation to investors and stay ahead of the S&P 500 index. It is rated 5 stars across all (1-year, 3-year, 5-year) investment periods and its 2012 performance has been good with a return of nearly 12%.
Vital Stats
- Total AUM: $768.19 Million
- NAV: $19.83
- Loads if any: None
- Company: Robeco Investment Management, Inc
- Primary Asset Allocation: Cash (69.16%) Stocks (21.86%)
- YTD returns : 2.6%
- 1-year: 11.9%
- 3-years: 15.4%
- 5-years: 17.1%
- Rating:
Pfizer, Inc
Johnson & Johnson
Berkshire Hathaway Inc Class B
Maiden Holdings, Ltd.
Royal Dutch Shell PLC ADR Class A
Fidelity Contrafund
A contrafund aims to invest in companies whose potential has not been judged by the market as yet and invests in them. The subsequent appreciation in share prices gives a healthy return for investors. The Fidelity Contrafund has been a consistent performer since its inception in 1990, as is expected to do well in 2013 as well.
Vital Stats
- Total AUM: $88.07 Billion
- NAV: $81.10
- Loads if any: None
- Company: Fidelity Brokerage Services LLC
- Primary Asset Allocation: Stocks (98.58%)
- YTD returns : 5.51%
- 1-year: 12.49%
- 3-years: 14.16%
- 5-years: 5.29%
- Rating:
Apple Inc
Google, Inc
Berkshire Hathaway Inc
Wells Fargo & Co
Coca-Cola Co
Fidelity Advisor Real Estate Income A
Although the real estate sector is still recovering, there are signs that demand for properties is going up, along with prices and the launch of many new construction projects. This may be a good time to invest in a fund which focuses on a particular sector, real estate and retail are both expected to rebound this year.
Vital Stats
- Total AUM: $3.55 Billion
- NAV: $11.74
- Loads if any: Front-Load @ 4%
- Company: Fidelity Brokerage Services LLC
- Primary Asset Allocation: Bonds (51.98%) Stocks (23.56%)
- YTD returns : 3.17%
- 1-year: 16.74%
- 3-years: 14.27%
- 5-years: 8.74%
- Rating:
Banc Amer Large Ln 2010-Hltn 2.00184%
Equity Lifestyle Properties, Inc
MFA Financial, Inc
Acadia Realty Trust
Ventas, Inc
*All NAV data as on 2/15/2013
Advantages of a Mutual Fund
Lower Risk
One does not have direct exposure to the stock markets which can be volatile this year as the economy recovers from the after-effects of the recession. At the same time you can get benefits with good investment policies of talented fund managers in large mutual fund corporations.
Diversification
The top-performing mutual funds can be from the large-cap and mid-cap category, where the risk is slightly higher because of sharp movements of stock prices. This will enable you to diversify your portfolio, as you can spread the risk over a variety of stock options.
Professional Management
Mutual funds offer expert investment management as they have fund managers and teams of analysts who track the market and make changes in the composition of the stock portfolios accordingly. One may not be able to do such intensive research alone due to time or other constraints. One can get expert investment advice by personally consulting relationship managers of major fund houses.
Investment options
One can invest both large amounts as one time bulk purchases of mutual funds, or choose to invest in contributions by purchasing a Systematic Investment Plan (SIP). This is a feature unique to this class of investment and helps small investors do both; save money and see it grow over time. Another great option open to mutual fund investors is the tax-advantage funds which enable one to save taxes relative to the investment made. The flexibility of mutual funds is what attracts investors of all ages.
Better Returns
Investing in a mutual fund gives better returns over time as compared to other forms of investment such as bank deposits or Commercial Deposits, simply because one becomes part of the stock market, which may be of a speculative nature, but gives higher capital appreciation than any other mode of investment. At the same time the risk is lowered as this is a collective form of investment and your money is not riding the tides alone.
The best mutual funds to invest in the coming years would be the ones which have a diversified stock holding across various sectors of the economy. These sectors can be banking, finance, insurance, automobiles, information technology and educational services. The funds should be allocated in such companies which have a high growth potential over the next five to ten years and are available at cheap valuations as compared to their prices. Identifying such investments would be the challenge before fund managers and wealth managers.
Mutual fund investments should be done by considering those showing best returns in the market, and by comparing their performance with other competitor funds. By analyzing the year-on-year annual returns given to investors, you will easily understand which mutual fund to invest in with a long term perspective. Now, the number of good mutual funds to invest in is quite large and hence, you need to be quite selective. A fund offering a low initial investment and having an approved track record would be the best mutual fund to invest in. Your investment adviser will guide you in making a good choice.
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