Your 401k is one of many tools for long-term investments. A 401k is typically compromised of different types of investment products to improve growth of the 401k and protect from volatility. Mutual funds are an investment product that financial analysts consider to have less risk due to combined funds. Check out these six 401k mutual funds for maximizing your long-term investments.
The Best Small-Cap Growth Fund
Small-cap growth funds are a great way to add higher earning potential with additional risk. Small cap companies are usually small, younger companies. Their small size makes them more vulnerable to market changes, which increases their risk, but they have more room for growth and profit. Janus Triton T fund (JATTX) is a high rated small-cap growth fund with a 26 percent annualized five year return. Janus offers a low expense ratio and no transaction fees.
The Best Mid-Cap Growth Fund
As indicated by their name, mid-cap growth funds are companies that are larger than small cap companies in capitalization and size. A larger size allows mid-cap companies to withstand market changes more easily, with an attractive potential for profit. The PRIMECAP Odyssey Aggressive Growth fund (POAGX) has a low expense ratio and a 27 percent annualized five year return. Healthcare companies make up almost half of this fund's portfolio weight.
The Best Large-Cap Growth Fund
The largest of the capitalization growth funds, large-cap companies offer the lowest risk. Large companies are able to weather economic changes with little variation to stock valuation. Due to their size, they generally offer less profit, but they are a safe addition to your 401k. The Delaware Pooled Trust Large-Cap Value fund (DPDEX) is highly rated and has outpaced the S&P 500 for the past ten years. At least one Delaware investment leader is managing this fund that predates the 2008 financial crisis. The DPDEX fund boasts an 18 percent annualized five year return.
The Best Low-Priced Stock Fund
Low-priced stock funds combine small and mid-cap stocks that are less than $35 per share. Combined funds keep risk lower than traditional stocks and offer the potential for good profits. The Fidelity Low-Priced Stock fund (FLPSX) has a large asset base and combines domestic and international stocks. The FLPSX fund has a five year annualized return of 23 percent and low expense ratios.
The Best Index Fund
Index funds are securities from a collection of companies. Index funds are not actively managed, so they can offer extremely low expense ratios. Index funds generally have low risk and low profit but are an excellent addition to a balanced 401k portfolio. The Vanguard 500 Index fund (VFINX) is highly rated and tracks the S&P 500. The VFINX fund has a five year annualized return of 17 percent and a very low expense ratio.
The Best Mutual Fund Company
Purchasing a fund is essentially buying into the mutual fund company, and you want to know that your money is in the right hands. Some mutual fund companies have specific funds that perform well, but the rest of their offerings are weak. When it comes to the best overall company offering mutual funds, Dodge & Cox excel. Assessment of Dodge & Cox reveals high five year returns on all funds and long tenure for top-level managers.
Making a decision about the mutual fund company that is best for you may not seem straight forward. Rather than stress about mutual fund choice for your 401k, consider using a money management firm. Fisher Investments provides a variety of financial management services. Visit one of the many Fisher Investments offices to speak to a financial associate.
Successful mutual fund selection for your 401k may seem overwhelming, but choosing from some of these high-rated mutual funds can maximize your long-term investments. Choosing the right small-cap growth fund, mid-cap growth fund, large-cap growth fund, low-priced stock fund, index fund, or mutual fund company are ways to keep your portfolio diverse and successful. What are some other mutual funds that round out your 401k portfolio?
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