MONEY funds

MONEY 50: The World’s Best Mutual Funds and ETFs

150104_MYF01
Marly Gallardo

Use our list of mutual and exchange-traded funds to construct a portfolio that's built to last.

As the go-nowhere market of 2015 winds down, you’re probably feeling disappointed by the returns of your fund portfolio. The typical core stock fund delivered double-digit returns for three years running, but was on track to close December flat for the year. Bond returns also stalled.

At times like these it’s important to remember that staying the course is still a winning strategy. That’s the guiding philosophy behind the MONEY 50, our list of the best mutual and exchange-traded funds (ETFs). We refuse to chase after chart-topping performers, which typically fizzle out. Instead, we favor Steady Eddie funds, which are more likely to give you solid returns over the long term. History shows that this approach is the surest way to reach your financial goals.

Since the MONEY 50 list is built to last, you can expect few changes from year to year. But this time around we made a major tweak: We added three tilted index ETFs, better known as smart-beta funds, which enable you to lean more heavily toward particular investing styles at a lower cost than hiring an active manager. To make room, we dropped three lagging actively managed funds.

Still, the MONEY 50 mostly remains the same. The core of our list is the building-block category—14 index funds or ETFs that mirror market benchmarks. These funds should make up the bulk, or all, of your portfolio. We also have a one-decision option, which provides broad diversification in a single fund. And we include a select group of active funds run by long-tenured managers. As always, all the funds are low cost, which gives you the best shot at the returns you need to meet your goals.

For help with some of the lingo, you’ll find a glossary below the tables.

Herewith, the 50 best mutual and exchange-traded funds for 2016.

Building-Block Funds
These funds and ETFs, which offer you exposure to big chunks of both the U.S. and foreign stock and bond markets, should be used for the core part of your port­folio that you’ll hold for years. Because you’re seeking broad market exposure, low-cost ­diversified index funds are your best bet.
Large-Cap Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Schwab S&P 500 Index (SWPPX) Blend 0.09% 3.5% 13.6% $100
Schwab Total Stock Market Index (SWTSX) Blend 0.09% 2.8% 13.3% $100
Midcap/Small-Cap Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Shares Core S&P Mid-Cap ETF (IJH) Blend 0.12% 1.2% 11.8% N.A.
iShares Core S&P Small-Cap ETF (IJR) Blend 0.12% 2.0% 13.1% N.A.
Foreign Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Fidelity Spartan International (FSIIX) Large Blend 0.20% 1.1% 4.4% $2,500
Vanguard Total International Stock (VGTSX) Large Blend 0.22% -2.1% 2.2% $3,000
Vanguard FTSE All-World ex-U.S. Small-Cap (VFSVX) Small/Mid Blend 0.37% 1.6% 2.6% $3,000
Vanguard Emerging Markets Stock (VEIEX) Emerging Markets 0.33% -13.1% -4.0% $3,000
Specialty Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Vanguard REIT Index (VGSIX) Real Estate 0.26% 0.1% 11.7% $3,000
Bond Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Vanguard Total Bond Market Index (VBMFX) Intermediate Term 0.20% 0.5% 3.0% $3,000
Vanguard Short-Term Bond Index (VBISX) Short Term 0.20% 1.0% 1.3% $3,000
Vanguard Inflation-Protected Securities (VIPSX) Inflation-Protected 0.20% -1.2% 2.4% $3,000
Vanguard Short-Term Inflation-Protected Sec. ETF (VTIP) Inflation-Protected 0.10% 0.0% N.A. N.A.
Vanguard Total International Bond Index (VTIBX) World 0.23% 0.8% N.A. $3,000
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.
Bond Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Fidelity Balanced (FBALX) Balanced 0.56% 2.2% 9.7% $2,500
Fidelity Global Balanced (FGBLX) Balanced 0.99% 0.0% 5.0% $2,500
Vanguard Wellington (VWELX)4 Balanced 0.26% 1.7% 9.8% $3,000
T. Rowe Price Retirement Funds Example: 2020 Fund (TRRBX)
62% stocks/38% bonds
Target Date 0.66% 1.3% 7.9% $2,500
Vanguard Target Retirement Example: 2035 Fund (VTTHX)
82% stocks/18% bonds
Target Date 0.18% 0.6% 8.9% $1,000
Custom Funds
Supplement your core holdings with these funds to tilt your portfolio toward certain kinds of stocks and bonds, diversify more broadly, or play a hunch.
Large-Cap Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Dodge & Cox Stock (DODGX) Value 0.52% -1.4% 13.1% $2,500
PowerShares FTSE RAFI U.S. 1000 ETF (PRF) Value 0.39% -0.6% 12.7% N.A.
Sound Shore (SSHFX) Value 0.92% -1.7% 12.6% $10,000
PowerShares S&P 500 High Quality Portfolio (SPHQ) Blend 0.29% 3.1% 14.4% N.A.
Primecap Odyssey Growth (POGRX) Growth 0.63% 6.6% 14.3% $2,000
T. Rowe Price Blue Chip Growth (TRBCX) Growth 0.72% 13.1% 16.2% $2,500
Midcap Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Ariel Appreciation (CAAPX) Blend 1.12% -2.0% 12.2% $1,000
WisdomTree MidCap Dividend (DON) Value 0.38% 0.5% 13.7% N.A.
T. Rowe Price Diversified Mid-Cap Growth (PRDMX) Growth 0.89% 4.6% 12.3% $2,500
Small-Cap Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Royce Opportunity (RYPNX) Value 1.15% –8.5% 7.9% $2,000
Vanguard Small-Cap Value ETF (VBR) Value 0.09% –0.8% 12.0% N.A.
WisdomTree SmallCap Dividend (DES) Value 0.38% –2.7% 11.5% N.A.
Wasatch Small Cap Growth (WAAEX)4 Growth 1.21% 2.3% 10.3% $2,000
Specialty Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
PowerShares International Dividend Achievers ETF (PID) Dividend 0.55% –14.9% 2.3% N.A.
SPDR S&P Dividend ETF (SDY) Dividend 0.35% 0.7% 12.7% N.A.
Cohen & Steers Realty (CSRSX) Real Estate 0.97% 2.9% 11.6% $10,000
SPDR Dow Jones International Real Estate ETF (RWX) Real Estate 0.59% –2.1% 5.9% N.A.
iShares North American Natural Resources ETF (IGE) Natural Resources 0.48% –19.0% –3.9% N.A.
Foreign Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Oakmark International (OAKIX)4 Foreign Large Blend 0.95% –1.6% 6.6% $1,000
Vanguard International Growth (VWIGX) Foreign Large Growth 0.47% 2.2% 4.5% $3,000
T. Rowe Price Emerging Markets Stock (PRMSX) Emerging Markets 1.24% –8.4% –2.7% $2,500
Bond Style Ann. Expenses Total Return in 2015 5 year Ann. Return Min. Inital Investment
Dodge & Cox Income (DODIX) Intermediate Term 0.44% 0.0% 3.8% $2,500
Fidelity Total Bond (FTBFX) Intermediate Term 0.45% 0.4% 3.7% $2,500
Vanguard Short-Term Investment Grade (VFSTX) Short Term 0.20% 1.2% 2.1% $3,000
iShares iBoxx $ Investment Grade Corp. Bond (LQD) Corporate 0.15% –0.4% 5.1% N.A.
Loomis Sayles Bond (LSBRX) Multisector 0.91% –5.3% 4.5% $2,500
Fidelity High Income (SPHIX) High Yield 0.72% –3.0% 4.8% $2,500
Vanguard Intermediate-Term Tax-Exempt (VWITX) Muni Natl. Intermediate 0.20% 2.3% 4.3% $3,000
Vanguard Limited-Term Tax-Exempt (VMLTX) Muni Natl. Short 0.20% 1.1% 1.7% $3,000
Templeton Global Bond (TPINX)5 World 0.90% –1.9% 3.1% $1,000
Fidelity New Markets Income (FNMIX) Emerging Markets 0.90% 1.9% 5.0% $2,500
NOTES: 1. Net prospectus expense ratios were used. 2. Total return figures are as of Dec. 4, 2015. 3. Five-year returns are annualized. 4. Shares available only through fund company.5. 4.25% sales load. N.A.: Not available or not applicable. ETFs do not have a minimum initial investment. ETFs do not have a minimum initial investment. SOURCES: Lipper and fund companies
Fund Glossary: How to Read the Tables
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
Tap to read full story

Your browser is out of date. Please update your browser at http://update.microsoft.com


YOU BROKE MONEY.COM!

Dear MONEY Readers,

As a regular visitor to MONEY.com, we are sure you enjoy all the great journalism created by our editors and reporters. Great journalism has great value, and it costs money to make it. One of the main ways we cover our costs is through advertising.

The use of software that blocks ads limits our ability to provide you with the journalism you enjoy. Consider turning your Ad Blocker off so that we can continue to provide the world class journalism you have become accustomed to.

The MONEY Team