As Americans look back at 2011 and look ahead to 2012, many are wondering what to do about their 401(k) retirement accounts and mutual fund investments. After a year like this one — with lots of short-term fireworks but little overall gains for the market — it seems harder than ever to plot a way to get ahead with your 401(k) mutual funds.
Thankfully, you can still find opportunities even in a choppy stock market. You just have to know where to look.
Here are the facts: Many widely held mutual funds will never do anything other than track the market because they’re tied to an index like the Dow Jones Industrials or S&P 500, and chalk up returns in kind. On the other hand, active managers often do even worse than the major indices. A parade of studies and statistics show that the average returns of mutual fund managers lag about one percentage point behind the stock market index that most closely resembles their strategy.
That means to get ahead, you either have to pick a better index to follow — or a better manager to run your 401(k) funds.
With this in mind, here are the 10 best mutual funds to consider for 2012, with two picks each across five distinct investment classes: blue-chip stocks, midsize stocks, small stocks, global investments and bonds.