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5 Best Mutual Funds to Buy for 2015

The logical way of putting together a list of the 5 best mutual funds to buy for 2015 would be to narrow things down to the one sector with the greatest prospects for the next 12 months … then choose five of the likely best performers from that sector.


But that would be too easy. (At least with exception of accurately forecasting the best sector of 2015.)

Instead, we’re looking at the whole enchilada. We’re culling the universe of more than 25,000 mutual funds into five categories that stand the best chance of market leadership in 2015, with one mutual fund for each that — when put together — should build a diverse portfolio that can help you profit in 2015 … and perhaps beyond.

So, in no particular order, here are the five best mutual funds of 2015.

5 Best Mutual Funds for 2015: Vanguard 500 Index (VFINX)

5 Best Mutual Funds for 2015: Vanguard 500 Index (VFINX)Type: Large-cap core
Expenses: 0.17%, no load
Minimum Initial Investment: $3,000

As tempted as I am to choose an actively managed core holding for 2015, my nod goes to the low-cost standard of passively managed large-cap funds, Vanguard 500 Index (VFINX).

In many regards, 2015 looks like it could favor active stock pickers. I believe next year will be divided by leadership between growth and value styles, with only the best of both taking the lead.

This narrows the finalist for best large-cap core holding to either a go-anywhere actively managed fund or a solid index fund with razor thin tracking error.

My intuition is to lean toward the latter.

On track to beat the average large blend fund for the sixth consecutive year, the S&P 500 — so Apple Inc. (AAPL), Exxon Mobil Corporation (XOM) and the like — continues to be the index to beat and my suspicion is that fewer funds will be able to top the market benchmark in 2015, where volatility and more downside pressure will weed out all but the best of best active funds.

Between that and VFINX’s dirt-cheap expense ratio, Vanguard 500 Index could be one of the best mutual funds for investors of all stripes to hold in 2015.

5 Best Mutual Funds for 2015: Dodge & Cox International Stock (DODFX)

5 Best Mutual Funds for 2015: Dodge & Cox International Stock (DODFX)Type: Foreign stock
Expenses: 0.65%, no load
Minimum Initial Investment: $2,500

If you want foreign exposure for your portfolio in 2015, you’ll want the outstanding combination of a low-cost, well-managed fund like Dodge & Cox International Stock (DODFX).

With China’s economy slowing and emerging markets getting weaker with the massive decline in oil prices, you’ll need a foreign stock fund that focuses on the western part of the world. The regional exposure for DODFX was recently around 16% Americas, 62% greater Europe and 22% greater Asia and includes top holdings such as Novartis AG (ADR) (NVS), Roche Holding Ltd. (ADR) (RHHBY) and Sanofi SA (ADR) (SNY).

DODFX looked outstanding in 2014 through mid-December, with only a 2.7% decline compared to the 7.4% beating the foreign large blend category took. On average, Dodge & Cox International beats more than 90% of category peers for the three-, five- and 10-year returns. What’s more, the lead managers have been at the helm since the inception of the fund more than 13 years ago.

Meanwhile, expenses are low and the minimum initial investment is reasonable.

5 Best Mutual Funds for 2015: Rydex Consumer Leisure (RYLIX)

5 Best Mutual Funds for 2015: Rydex Consumer Leisure (RYLIX)Type: Sector equity
Expenses: 1.37%, no load
Minimum Initial Investment: $2,500

2015 may be a comeback year for the American consumer and Rydex Consumer Leisure (RYLIX) may be the fund to reap the rewards.

With unemployment and energy prices falling, and home prices and 401k balances rising, consumers will not only have more money in their wallets and purses in 2015, but the so-called wealth effect that makes them feel (and spend) like they have the money is sure to add fuel to the fire of consumer cyclical stocks.

RYLIX is a standout in the consumer discretionary sector with a solid performance track record and experienced management team with an average manager tenure of more than 10 years.

The portfolio is rich with leisure companies like Walt Disney Co (DIS) and Starbucks Corp (SBUX) that are poised to be leaders when American consumers begin to feel good about spending again.

5 Best Mutual Funds for 2015, Loomis Sayles Retail Bond (LSBRX)

5 Best Mutual Funds for 2015, Loomis Sayles Retail Bond (LSBRX)Type: Fixed income
Expenses: 0.91%, no load
Minimum Initial Investment: $2,500

2015 is predicted to be the year that interest rates finally begin to rise. But so was 2014, 2013, 2012 and 2011. As we end 2014, the Federal Reserve is assuring the markets that they will not allow the energy fallout to kill the easy money.

Although multisector bond funds can come with their share of market risk, a go-anywhere bond fund like Loomis Sayles Retail Bond (LSBRX) can be a good bet for the uncertainty that is sure to mark the year to come.

Also, the logical move for 2015 is to shorten duration and, for the risk averse, to go higher credit quality. But the other side of the market risk is the risk of not keeping up with inflation and getting yields next to zero for another year.

The high returns investors have come to expect from LSBRX in recent years is partially due to its exposure to high-yield bonds. However, legendary fixed income portfolio manager Dan Fuss has 50 years of experience driving the ship, so rest easy knowing that this should be one of the best mutual funds in the fixed-income space for 2015.

5 Best Mutual Funds for 2015: ableBanking Personal Money Market

able-banking-185Type: Money market
Minimum Initial Deposit: $250

I know, money market funds are boring, they’re technically not even mutual funds and they certainly don’t seem to fit in a “best of” list of investments … but perhaps that is one of a few compelling reasons to add cash to a diversified portfolio in 2015.

Stock prices are getting expensive. The 30-year secular bull run for bonds is ending. And commodity prices — especially for oil and gold — are falling hard and fast, with perhaps more downside remains.

There is only one asset class that has any certainty of producing a positive return in the short term, and that asset is cash.

The highest yields for money markets are coming from  online banks, not the money market funds from brokerage firms. The ableBanking Personal Money Market account from ableBanking — a Northeast Bancorp (NBN) division — has a 1.00% APY, allows 6 withdrawals per month and is FDIC-insured and requires only an initial deposit of $250.

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.

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