Angus Greig

MONEY 50 (2015 Edition): The World's Best Mutual Funds and ETFs

Updated: Jan 04, 2016 11:08 AM ET | Originally published: Jan 05, 2015

Here's the updated 2016 edition of MONEY 50: The World's Best Mutual Funds and ETFs.

Over the past five years of impressive stock and bond returns, the rising tide lifted nearly all boats. Alas, tides ebb, and the markets have been high for longer than usual. It’s time to look at what matters to you not only when seas are calm, but also when they’re stormy.

That’s the thinking behind the MONEY 50, our selection of the world’s best mutual and exchange-traded funds. Note that we didn’t say “top-performing” or “hottest.” Instead, by sticking to low-cost portfolios run by rock-solid management, the MONEY 50 is meant to give you the best shot possible at outperformance over dec­ades, not months or years.

How to use the list? The funds are broken into three basic categories -- building-block, custom, and single-decision -- each of which is meant for a different purpose.

  • Building-block: Use these as your core holdings. These are 14 low-fee index funds -- both traditional mutual funds and ETFs, which you buy and sell like stock -- that closely track market benchmarks such as the S&P 500. The goal with here is broad diversification.
  • Custom: Use these to augment your core holdings with alternative investments such as real estate or natural resources. You can also use them to tilt your portfolio toward asset classes that tend to outperform the market over the long run, such as the stocks of smaller companies or “value” stocks, which are cheap relative to their earnings per share.
  • Single-decision: For those who want to make just a single investment decision, these two target ­retirement-date fund offerings grow more conservative as you get older.

Two final notes: First, for help with some of the terminology in the MONEY 50, you'll find a glossary below the tables; and second, for more about how we choose the MONEY 50 funds, and how the list changed this year compared to last, read this.

And now, the world’s 50 best mutual and exchange-traded funds:

Building-Block Funds

These funds and ETFs, which offer you exposure to big chunks of the stock and bond markets, should be used for the core part of your portfolio that you’ll hold on to for years. because you’re seeking broad market exposure, low-cost diversified index funds are your best bet.

Large CapStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Schwab S&P 500 IndexBlend0.0913.5%15.9%$100
Schwab Total Stock Market IndexBlend0.0911.9%16.2%$100

Midcap/Small-CapStyleExpense RatioYTD Return5 yr ReturnInitial Investment
iShares Core S&P Mid-Cap ETF Blend0.148.1%17.1%N.A.
iShares Core S&P Small-Cap ETFBlend0.142.4%17.7%N.A.

ForeignStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Fidelity Spartan InternationalLarge Blend0.20-2.6%6.1%$2,500
Vanguard Total International StockLarge Blend0.22-2.1%5.0%$3,000
Vanguard FTSE All-World ex-U.S. Small-CapSmall/Mid Blend0.40-4.4%6.6%$3,000
Vanguard Emerging Markets StockEmerging Markets0.332.2%2.6%$3,000

SpecialtyStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Vanguard REIT IndexReal Estate0.2428.4%17.6%$3,000

BondStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Vanguard Total Bond Market IndexIntermediate Term0.205.3%3.9%$3,000
Vanguard Short-Term Bond IndexShort Term0.201.2%1.8%$3,000
Vanguard Inflation-Protected SecuritiesInflation-Protected0.203.8%3.8%$3,000
Vanguard S/T Inflation-Protected Sec. ETFInflation-Protected0.10-0.6%N.A.N.A.
Vanguard Total International Bond IndexWorld0.237.9%N.A.$3,000

Custom Funds

Supplement your core holdings with these funds to give your portfolio a tilt toward certain kinds of stocks and bonds, diversify more broadly, or play a hunch.

Large Cap

StyleExpense RatioYTD Return5 yr ReturnInitial Investment
Dodge & Cox StockValue0.5210.4%16.0%$2,500
PowerShares FTSE RAFI U.S. 1000 ETFValue0.3911.6%16.4%N.A.
Sound ShoreValue0.9311.9%15.4%$10,000
Primecap Odyssey GrowthGrowth0.6615.1%17.1%$2,000
T. Rowe Price Blue Chip GrowthGrowth0.749.6%17.7%$2,500

Mid-CapStyleExpense RatioYTD Return5 yr ReturnInitial Investment
The Delafield FundValue1.22-6.0%11.9%$1,000
Ariel AppreciationBlend1.137.1%16.7%$1,000
Weitz HickoryBlend1.220.8%17.3%$2,500
T. Rowe Price Div. Mid-Cap GrowthGrowth0.9110.1%17.1%$2,500

Small-CapStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Royce OpportunityValue1.17-4.1%15.7%$2,000
Vanguard Small-Cap Value ETFValue0.098.3%17.0%N.A.
Wasatch Small Cap Growth5Growth1.240%15.5%$2,000

ForeignStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Dodge & Cox International StockLarge Blend0.643.3%8.8%$2,500
Oakmark International5Large Blend0.98-2.6%10.6%$1,000
Vanguard International GrowthLarge Growth0.48-2.7%7.7%$3,000
T. Rowe Price Emerging MarketsEmerging Markets1.253%2.9%$2,500

BondStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Dodge & Cox Income FundIntermediate Term0.435.4%5.1%$2,500
Fidelity Total Bond (FTBFX)Intermediate Term0.455.3%5.3%$2,500
Vanguard Short-Term Investment GradeShort Term0.201.7%2.8%$3,000
iShares iBoxx $ Inv. Grade Corp.Corporate0.157.9%6.8%N.A.
Loomis Sayles BondMultisector0.924.9%8.5%$2,500
Fidelity High IncomeHigh Yield0.721.8%8.5%$2,500
Vanguard Intermediate-Term Tax-Exempt Fund Investor SharesMuni Nat'l Intermediate0.206.9%4.4%$3,000
Vanguard Limited-Term Tax-Exempt FundMuni Nat'l Short0.201.9%1.9%$3,000
Templeton Global Bund Fund4World0.882.7%6.1%$1,000
Fidelity New Markets IncomeEmerging Markets0.865.7%7.4%$2,500

One-Decision Funds

Don’t want to put together a portfolio on your own? Then use one of these professionally managed funds that hold a diversified mix of stocks and bonds.

Fund NameStyleExpense RatioYTD Return5 yr ReturnInitial Investment
Fidelity BalancedBalanced0.5610.1%12.0%$2,500
Vanguard Wellington FundBalanced0.2610.1%11.5%$3,000
T. Rowe Price Retirement 2020 FundTarget Date0.676.0%10.7%$2,500
Vanguard Target Retirement 2035 Fund Investor SharesTarget Date0.187.4%11.8%$1,000
NOTES: 1. Net prospectus expense ratios were used . 2. Total return figures are as of Dec. 8. 3. Five-year returns are annualized. 4. 4.25% sales load. 5. Shares available only through fund company. ETFs do not have a minimum initial investment. SOURCES: Lipper and fund companies

Fund glossary

Large-cap: Invests in shares of firms with stock market values, or market capitalizations, of $10 billion or more

Small-cap and midcap: Invest in smaller companies

Specialty: Invests in assets that don’t move in sync with the broad stock or bond market

Target date: Provides exposure to a mix of stocks and bonds appropriate for your age—and gradually grows more conservative over time

Balanced: Offers you exposure to a mix of stocks and bonds, but doesn’t grow more conservative over time

Value: Looks for stocks that are selling at bargain prices

Growth: Focuses on companies with fast-growing earnings

Blend: Owns both growth- and value-oriented stocks

Short term: Owns bonds that mature in about two years or less

Intermediate term: Owns bonds that mature in two to 10 years

Multisector: Can buy foreign or domestic bonds of any maturity

Inflation-protected: Owns bonds whose value at least keeps pace with the consumer price index

Read next: How MONEY Selected the 50 Best Mutual Funds and ETFs

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