If you are new to the world of wealth management strategies then the term "mutual fund" should promptly be added to your financial lexicon. They are a great way to securely invest money so you can better afford the luxuries in life at a future date and time.
When it comes to the top mutual funds, you should always look towards those that have withstood the test of time. Startup operations claiming to wield the next big thing often succumb to market pressures or have their ego-driven verbiage debunked. Those mutual funds that have been around for decades have, however, weathered it all. The good, the bad and the ugly. They've consistently proven their capabilities to adapt to fluctuating markets while leading investors forward.
Why a Mutual Fund?
A mutual fund takes the risk out of investing in individual securities. It does so by pooling your investment money with those of others to invest in a number of securities. These securities include high-performing stocks, bonds, and various other securities. By diversifying the investment, a mutual fund minimizes the risk of initial investment and increases return by having stakes in multiple securities.
Mutual funds are a great choice for those who want to invest their money but do not have the knowledge, time, or experience necessary to do so with minimal risk. Money managers are responsible for the management of mutual funds and what securities are invested in. These groups, individuals, and companies are skilled in their craft and spend much of their time dedicated to market research and the creation of algorithms. All their work is designed to drive return on investment.
For a minimal fee that is applied to annual funds under management you can join a mutual fund at any point in your financial life cycle. Though they do have an average initial investment amount in excess of $1,000, there are some funds with low minimums near the $100 – $500 range. Just about anybody can join the security of a mutual fund. If a low barrier to entry is what you seek – whether to help you save for travel or other expenses – then you can find such in a mutual fund.
There are a few key metrics to pay attention to when determining the best mutual fund for you: risk tolerance, expense ratio, and turnover ratio. These will factor heavily in how long it takes to see a significant return on your investment and how much you will have to spend to keep your mutual fund account running.
Now that you're armed with information regarding mutual funds and why you should explore investing in one, here are the top performing mutual funds from the past 4 decades. They are the ones you should consider for added security and performance.
Located in Boston, Massachusetts, Fidelity Magellan has been the top performing mutual fund over the past four decades. It manages more than $15 billion in net assets and has produced an 8.58% return in its latest listing.
Fidelity Magellan was founded in 1963, making it one of the longest performing mutual funds out there. It's 40 year return rate stands at 14.80%. That is an impressive number considering numerous economic downturns and market recessions. Its worst year came in 2008 (no surprise there), and its best came in 1980.
Leading the team at Fidelity Magellan is Jeffrey Feingold. He has held the position of manager since 2011 and has been through the thick and thin with Fidelity Magellan, originally joining the operation in 1997.
Though Fidelity Management does have a borderline holdings turnover of 53%, it does report a 1.07% annual report expense ratio to go along with its higher returns. That makes it a solid option for large growth financial strategies.
Alger Spectra comes in at a close second to Fidelity Magellan when it comes to performance over the last 4 decades. Listed as SPECX on NASDAQ, the mutual fund is based out of New York and is another industry veteran, founded in 1969. It currently manages more than $5 billion in net assets and has produced a 9.06% return in its latest listing.
Alger Spectra is led by Patrick Kelly and has been since 2004. This was a position he moved into after joining the company in 1999. With 20 years of experience in mutual fund strategy and investment, Patrick has led Alger Spectra through confident growth and performance over unsteady times. With Patrick at the helm, Alger Spectra specializes in identifying preferred stocks in both the U.S. and foreign markets. The ability of the company to deliver outstanding returns has been evident and paid testament to the in-depth research conducted by Patrick and his analysts.
As with Fidelity Magellan, the worst year Alger Spectra experienced was in 2008. In this year they saw a -42.19% return. Their best year nicely countered this negative return, however. That occurred in 1999 when the fund posted a 72.01% return. Alger management does tend to have a higher than desired holdings turnover. At 74.19% it is at the higher end of the spectrum. This means you may look at paying higher taxes and fees to maintain the account. Like Fidelity Magellan, it also reports an annual expense ratio of 1.07%.
Of its 49 years in operation, the company has produced 36 years in the positive. Once again, Alger Spectra is a fund to feel confident in for long-term investment strategy.
Columbia Acorn is led by Louis Mendes. He has been the Lead Manager since 2003 and with the mutual fund since 2001. He has more than 30 years of experience in the industry and has done an admirable job of driving the Chicago mutual fund forward.
Over the past 40 years Columbia Acorn (ACINX) has posted an average return of 14.23%. Its best year came in 1979, and its worst – to no surprise – came in 2008. The mutual fund has more than $2.5 billion in net assets and is adept in mid growth wealth management strategies. Unlike the previous two mutual funds on this list Columbia Acorn spends much of its assets abroad. Its largest markets are in Japan, Canada, the United Kingdom, China, and India.
For those investors looking at holdings turnover as an important metric, they will appreciate the 37% turnover by the company. This is somewhat offset by a higher annual report expense ratio that stands at 1.39%.
Columbia is a riskier mutual fund to invest in, but it has had some big foreign bets payoff. In their 26 years of operation, the company has posted 16 years in the positive and 10 years in the negative.
American Funds Growth Fund of Amer A
American Funds Growth Fund of Amer A (AGTHX) is a California mutual fund with a low holdings turnover and annual report expense ratio. They are an older firm, founded in 1973, and currently manage over $180 billion in net assets. That makes them best for those who are seeking large growth investments that will play out over the long term.
With a lot of assets to manage, the mutual fund invests in common stocks that are secure and offer forecastable growth. This may categorize it in the safe category when it comes to risk, and you would not be wrong to think such. In its 45 years of operation, AGTHX has seen 37 years in the positive and 8 in the negative. Its best year came in 1979 and its worst in 2008. The 40 year return it posted over the past four decades was 13.78%.
For those wanting a different type of mutual fund with multiple levels of management, you'll like what AGTHX has to offer. Though they are led by Alan Wilson (Lead Manager since 2012), the company uses multiple portfolio managers in different asset and segment categories. This allows for greater flexibility and choice when it comes to where your money is invested.
Davis NY Venture
Don't let the name fool you, Davis New York Venture Fund Inc (NYVTX) is an Arizona firm led by Christopher Cullom Davis. It was founded in 1969 and has posted a 40-year return of 13.46%. Its best year came in 1980, posting a 43.91% return for its investors. Its worst came in 2008, posting a -40.03% return.
Managing just over $9 billion in net assets, the company has a low holding turnover of 25% and a low annual expense ratio of 0.95%. It employs a long-term growth strategy that invests primarily in large enterprises backed by significant assets.
Davis NY Venture boasts a five star risk rating, making it one of the safest mutual funds on the market. In its 49 years of operation it has seen 38 years in the positive and 11 years in the negative.
T. Rowe Price Small-Cap Stock
Based out of Baltimore, Maryland, T. Rowe Price Small-Cap Stock (OTCFX) is the oldest mutual fund on this list and one of the more well-known. Founded in 1956, the mutual fund is managed by Frank Alonso and has been since 2006. He joined the company in 2000 and continues the mutual fund's strategy of long-term capital growth through investment in small companies.
With its investment in smaller companies comes a higher risk and 40 year return percentage of 13.43%. OTCFX manages more than $9 Billion in net assets. It has a low holdings turnover percentage but higher annual report expense ratio.
For those looking at a potential boom-or-bust small stock investment option and the security of a mutual fund, T. Rowe Price Small-Cap Stock may be your best play. While there is plenty of potential for the smaller companies to fold, holding on to the stock of these small companies in the long run can pay out big time.
Mutual funds are a great way to diversify and secure your potential profile. They have been around since 1924 and offer a great way to grow your financial assets. Even if your financial acumen does not go beyond being an average credit card user, you can feel safe in investing in a mutual fund as long as you know what to look for. By understanding risk tolerance, turnover ratios, expense ratios, and the strategies of various mutual funds, you can set yourself up to change your life.