Retirement may seem far off for some, but it's never too late to start investing in mutual funds to secure a comfortable future. Mutual funds offer a convenient way for investors to diversify their portfolios and gain exposure to a range of stocks and bonds. With so many options available, it can be overwhelming to know where to start. That's where the Zacks Mutual Fund Rank comes in handy. This tool helps investors identify top-performing mutual funds based on a variety of factors, including past performance, management tenure, and expense ratios.
To help investors navigate the world of mutual funds, Morningstar's director of personal finance Christine Benz has created a series of portfolios designed to meet different financial goals. These portfolios range from conservative to aggressive and include a mix of mutual funds and exchange-traded funds (ETFs). Benz recommends starting with a balanced portfolio and adjusting the asset allocation as needed based on individual goals and risk tolerance.
For investors looking to generate income from their mutual fund investments, high dividend-paying funds are a good option. Some top-ranked funds in this category include EQTIX, MLPFX, BMEAX, and PDARX. These funds focus on companies with a track record of paying strong dividends and may also provide some capital appreciation over time.
Dimensional Fund Advisors is a well-known name in the mutual fund industry and offers a range of funds with a focus on factor-based investing. Below are three top-ranked Dimensional mutual funds, each with a Zacks Mutual Fund Rank of #1:
- DFA US Small Cap Portfolio (DFSTX)
- DFA US Targeted Value Portfolio (DFFVX)
- DFA International Small Cap Value Portfolio (DISVX)
Balanced funds are a popular choice for investors looking for a mix of stocks and bonds in their portfolios. These funds typically have a target asset allocation of around 60% stocks and 40% bonds, although this can vary depending on the fund. Balanced funds offer a way for investors to diversify their portfolios while also managing risk. Some top-ranked balanced funds include Vanguard Balanced Index Fund (VBINX), T. Rowe Price Balanced Fund (RPBAX), and American Funds Balanced Fund (ABALX).
For investors looking for mutual funds that focus on equity, the Schwab Small-Cap Index (SWSSX) and Fidelity Emerging Markets Discovery Fund (FEDDX) are worth considering. The Schwab fund tracks the performance of the Dow Jones U.S. Small-Cap Total Stock Market Index, while the Fidelity fund invests in small and mid-cap companies in emerging markets.
The mutual fund industry has seen its fair share of upheaval in recent years, with the banking industry in particular facing significant challenges. According to the Investment Company Institute, this has resulted in increased interest in mutual funds as investors seek to diversify their portfolios and hedge against market volatility.
In April 2023, Middlefield Innovation Dividend ETF (TSX: MINN) announced the launch of a new fund designed to invest in innovative companies with a track record of paying strong dividends. The fund is aimed at investors looking for exposure to companies at the forefront of technological innovation.
Overall, investing in mutual funds can be a smart way to build wealth and prepare for retirement. By using tools like the Zacks Mutual Fund Rank and following the advice of financial experts like Christine Benz, investors can make informed decisions and create portfolios that align with their goals and risk tolerance.
