Money 50 (2015 Edition): The World's Best Mutual Funds and ETFs
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 Cap | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Schwab S&P 500 Index | Blend | 0.09 | 13.5% | 15.9% | $100 |
| Schwab Total Stock Market Index | Blend | 0.09 | 11.9% | 16.2% | $100 |
| Midcap/Small-Cap | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| iShares Core S&P Mid-Cap ETF | Blend | 0.14 | 8.1% | 17.1% | N.A. |
| iShares Core S&P Small-Cap ETF | Blend | 0.14 | 2.4% | 17.7% | N.A. |
| Foreign | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Fidelity Spartan International | Large Blend | 0.20 | -2.6% | 6.1% | $2,500 |
| Vanguard Total International Stock | Large Blend | 0.22 | -2.1% | 5.0% | $3,000 |
| Vanguard FTSE All-World ex-U.S. Small-Cap | Small/Mid Blend | 0.40 | -4.4% | 6.6% | $3,000 |
| Vanguard Emerging Markets Stock | Emerging Markets | 0.33 | 2.2% | 2.6% | $3,000 |
| Specialty | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Vanguard REIT Index | Real Estate | 0.24 | 28.4% | 17.6% | $3,000 |
| Bond | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Vanguard Total Bond Market Index | Intermediate Term | 0.20 | 5.3% | 3.9% | $3,000 |
| Vanguard Short-Term Bond Index | Short Term | 0.20 | 1.2% | 1.8% | $3,000 |
| Vanguard Inflation-Protected Securities | Inflation-Protected | 0.20 | 3.8% | 3.8% | $3,000 |
| Vanguard S/T Inflation-Protected Sec. ETF | Inflation-Protected | 0.10 | -0.6% | N.A. | N.A. |
| Vanguard Total International Bond Index | World | 0.23 | 7.9% | 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 | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Dodge & Cox Stock | Value | 0.52 | 10.4% | 16.0% | $2,500 |
| PowerShares FTSE RAFI U.S. 1000 ETF | Value | 0.39 | 11.6% | 16.4% | N.A. |
| Sound Shore | Value | 0.93 | 11.9% | 15.4% | $10,000 |
| Primecap Odyssey Growth | Growth | 0.66 | 15.1% | 17.1% | $2,000 |
| T. Rowe Price Blue Chip Growth | Growth | 0.74 | 9.6% | 17.7% | $2,500 |
Large Cap
| Mid-Cap | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| The Delafield Fund | Value | 1.22 | -6.0% | 11.9% | $1,000 |
| Ariel Appreciation | Blend | 1.13 | 7.1% | 16.7% | $1,000 |
| Weitz Hickory | Blend | 1.22 | 0.8% | 17.3% | $2,500 |
| T. Rowe Price Div. Mid-Cap Growth | Growth | 0.91 | 10.1% | 17.1% | $2,500 |
| Small-Cap | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Royce Opportunity | Value | 1.17 | -4.1% | 15.7% | $2,000 |
| Vanguard Small-Cap Value ETF | Value | 0.09 | 8.3% | 17.0% | N.A. |
| Berwyn | Blend | 1.20 | -7% | 14.9% | $3,000 |
| Wasatch Small Cap Growth5 | Growth | 1.24 | 0% | 15.5% | $2,000 |
| Foreign | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Dodge & Cox International Stock | Large Blend | 0.64 | 3.3% | 8.8% | $2,500 |
| Oakmark International5 | Large Blend | 0.98 | -2.6% | 10.6% | $1,000 |
| Vanguard International Growth | Large Growth | 0.48 | -2.7% | 7.7% | $3,000 |
| T. Rowe Price Emerging Markets | Emerging Markets | 1.25 | 3% | 2.9% | $2,500 |
| Bond | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Dodge & Cox Income Fund | Intermediate Term | 0.43 | 5.4% | 5.1% | $2,500 |
| Fidelity Total Bond (FTBFX) | Intermediate Term | 0.45 | 5.3% | 5.3% | $2,500 |
| Vanguard Short-Term Investment Grade | Short Term | 0.20 | 1.7% | 2.8% | $3,000 |
| iShares iBoxx $ Inv. Grade Corp. | Corporate | 0.15 | 7.9% | 6.8% | N.A. |
| Loomis Sayles Bond | Multisector | 0.92 | 4.9% | 8.5% | $2,500 |
| Fidelity High Income | High Yield | 0.72 | 1.8% | 8.5% | $2,500 |
| Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares | Muni Nat'l Intermediate | 0.20 | 6.9% | 4.4% | $3,000 |
| Vanguard Limited-Term Tax-Exempt Fund | Muni Nat'l Short | 0.20 | 1.9% | 1.9% | $3,000 |
| Templeton Global Bund Fund4 | World | 0.88 | 2.7% | 6.1% | $1,000 |
| Fidelity New Markets Income | Emerging Markets | 0.86 | 5.7% | 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 Name | Style | Expense Ratio | YTD Return | 5 yr Return | Initial Investment |
|---|---|---|---|---|---|
| Fidelity Balanced | Balanced | 0.56 | 10.1% | 12.0% | $2,500 |
| Vanguard Wellington Fund | Balanced | 0.26 | 10.1% | 11.5% | $3,000 |
| T. Rowe Price Retirement 2020 Fund | Target Date | 0.67 | 6.0% | 10.7% | $2,500 |
| Vanguard Target Retirement 2035 Fund Investor Shares | Target Date | 0.18 | 7.4% | 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