If you’re looking for the best BlackRock mutual funds to buy now, you are in luck for two reasons: 1) There are hundreds of BlackRock funds to choose from, and 2) we’re doing the hard work for you by giving you the top four BlackRock mutual funds!
A primary reason there are so many BlackRock funds to choose from is that the parent company, BlackRock, Inc (BLK), acquired other asset managers, such as Merrill Lynch Investment Managers, State Street, and Barclays Global. Therefore, many of their mutual funds consist of old Merrill Lynch mutual funds, and BlackRock also owns the State Street ETFs, which are otherwise known as “iShares.”
Selection Criteria for the Best BlackRock Mutual Funds
Coming up with any “best of” list is often a subjective undertaking — just look at the reactions to any list of the best rock albums of all time. For this reason, I made my best attempt at forming an objective selection criteria for the top four BlackRock mutual funds.
- I selected one fund from each of the four categories where BlackRock shines brightest: 1) U.S. stock funds, 2) bond funds, 3) sector funds, and 4) balanced/tactical allocation funds.
- I eliminated fund categories where BlackRock does not compete well compared to other mutual fund companies, such as international stock funds, domestic stock index funds, and target-date funds.
- Long-term performance has a greater weight than short-term performance.
- Lower expense ratios and longer manager tenure are pluses.
Now let the top four BlackRock mutual funds speak for themselves:
Best BlackRock Mutual Funds: BlackRock US Opportunities Inv A (BMEAX)
Category: U.S. stocks
BlackRock US Opportunities Inv A (BMEAX) is a midcap stock fund that can work well as a core holding in a portfolio of BlackRock mutual funds. While the holdings are primarily midcap stocks, there is a good mix of large-cap and small-cap stocks as well.
For example, within the top 10 holdings, you will find Sirius XM Holdings (SIRI), Alliance Data Systems Corp (ADS), and BankUnited Inc (BKU), spanning the range of large-cap, midcap and small-cap stocks.
BMEAX outperforms 96% of its midcap category peers for 10-year annualized return, and the lead fund manager, Thomas Callan, has been at the helm for 12 years. The expense ratio is a bit above category average at 1.47%, and the minimum initial purchase amount is $1,000.
Front load fees vary according to the type of fund and size of the investment, but most investors can expect to pay at least 4%.
Best BlackRock Mutual Funds: BlackRock Total Return Inv A (MDHQX)
Category: Intermediate-term bonds
BlackRock Total Return Inv A (MDHQX) has a diversified mix of intermediate-term bonds that stretches beyond the standard mix of U.S. treasury bonds and high-credit-quality corporate bonds. MDHQX includes high-yield and bank debt, commercial mortgage-backed securities and emerging-market bonds for an average credit rating of BBB.
With a 30-day SEC yield of 3.03%, MDHQX also delivers the goods for income investors. Like most other BlackRock funds, MDHQX has an above-average net expense ratio, which is 1.04%.
Past performance is below-average for the 10-year return, but the recent management changes, beginning four years ago, reveal a promising future with a 3-year return of 5.7%, which beats 93% of category peers.
The minimum initial investment for MDHQX is $1,000.
Best BlackRock Mutual Funds: BlackRock Health Sciences Inv A (SHSAX)
Category: Health Sector
BlackRock Health Sciences Inv A (SHSAX) has reliably performed well with category averages for short and intermediate-term periods and the 10-year performance rank of 16 makes this fund a solid holding in the challenging category of health sector funds.
With holdings that are primarily large-cap stocks, SHSAX includes U.S. health sector standards like Merck and Co, Inc (MRK) and Johnson and Johnson (JNJ) as well as European names like Actavis (ACT) and Novartis (NVS).
Expenses are reasonable (for a sector fund) at 1.22%, and the minimum initial investment is $1,000.
Best BlackRock Mutual Funds: BlackRock Balanced Capital Inv A (MDCPX)
Category: Balanced / Tactical Allocation
BlackRock Balanced Capital Inv A (MDCPX) seeks high returns with a mix of stocks, bonds and convertible securities. Giving MDCPX its “tactical” categorization, the fund can also employ hedging tactics with derivatives, such as credit default swaps, indexed and inverse floating rate securities, options, and futures.
Performance history is impressive with 1-year, 3-year, 5-year, and 10-year returns beating the average tactical allocation fund. In addition, the expense ratio is below category average at 0.97%.
The minimum initial investment is $1,000.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.