When shopping for mutual funds, we naturally are curious: Which ones are performing the best today?
While that’s a common place to begin your search, remember you’re shopping for tomorrow when looking for the best mutual funds. Top performers in the short term don’t always become long-term winners. The best mutual funds for your portfolio won’t necessarily be the best for your parents, your siblings or your neighbors.
To determine the best mutual funds measured by year-to-date performance, we looked at large-cap growth funds with low costs (no sales commissions and expense ratios of 1% or less). For more on how to choose a mutual fund, skip ahead to this section.
Best large-cap growth funds as of August 2019
These growth-stock mutual funds buy stock in rising U.S. companies with market capitalizations of more than $10 billion.
|Symbol||Fund||Fund performance (YTD)||5-year average annual return||Gross expense ratio|
|BIAGX||Brown Advisory Growth Equity Fund||29.76%||13.39%||0.86%|
|PREFX||T. Rowe Price Tax-Efficient Equity Fund||29.68%||13.46%||0.81%|
|BIAWX||Brown Advisory Sustainable Growth Fund||28.57%||16.08%||0.88%|
|AVEGX||Ave Maria Growth Fund||28.56%||12.89%||0.97%|
|LGILX||Laudus U.S. Large Cap Growth Fund||28.28%||14.3%||0.76%|
|GGEZX||GuideStone Funds Growth Equity Investor Class||27.82%||12.82%||0.98%|
|JACTX||Janus Henderson Forty Fund Class T||27.06%||15.03%||0.91%|
|VWUSX||Vanguard U.S. Growth Fund Investor Shares||27.03%||13.38%||0.38%|
|FTRNX||Fidelity Trend Fund||27.01%||12.49%||0.67%|
|CFGRX||Commerce Growth Fund||26.81%||13.96%||0.77%|
How to choose the best mutual funds for you
NerdWallet’s recommendation is to invest primarily through mutual funds, especially index funds, which passively track a market index such as the S&P 500. The mutual funds above are actively managed, which means they try to beat stock market performance — a strategy that often fails.
» Related: Best performing stocks this month
When you’re ready to invest in funds, here’s what to consider:
- Decide whether to invest in active or passive funds, knowing that both performance and costs often favor passive investing.
- Understand and scrutinize fees. A broker that offers no-transaction-fee mutual funds can help cut costs.
- Build and manage your portfolio, checking in on and rebalancing your mix of assets once a year.
» Learn more: How to invest in mutual funds
Below are some of our picks for the best providers for mutual funds and index funds:
» Want to see more options for fund investing? See the full list of brokers
Focus on what matters
Chasing past performance may be a natural instinct, but it often isn’t the right one when placing bets on your financial future. Mutual funds are the cornerstone of buy-and-hold and other retirement investment strategies. Hopping from stock to stock based on performance is a rear-view-mirror tactic that rarely leads to big profits. That’s especially true with mutual funds, where each transaction may bring costs that erode any long-term gains.
What’s important to consider is the role any mutual fund you buy will play in your total portfolio. Mutual funds are inherently diversified, as they invest in a collection of companies (rather than buying stock in just one). That diversity helps spread your risk.
You can create a smart, diversified portfolio with just a few well-chosen mutual funds, plus annual check-ins to fine-tune your investment mix.