Top 10 Mutual Funds for the Rest of 2016

Our list offers top mutual funds that can fit into your portfolio

By Kent Thune, InvestorPlace Contributor

http://bit.ly/2dSgesN

Source: Photo by CafeCredit.com via Flickr

As we finish the remainder of 2016, the best mutual funds to buy are most likely to be the ones that have the best year-to-date returns, especially those that trended higher in the third quarter.

Top 10 Mutual Funds for the Rest of 2016You may have heard the investing mantra, the trend is your friend until the end. For the rest of 2016, this might apply to certain sectors, such as energy, technology and industrials, and to a few mutual fund categories like small-cap stock and emerging markets, all of which have year-to-date gains that are ahead of the S&P 500 and most still had momentum in the third quarter. We also highlight a few select bond fund types.

For performance reference on the S&P 500, Vanguard 500 Index Fund (MUTF:VFINX), is up about 6% year-to-date.

With that said, there are a few areas that are leaders in 2016 but lost steam in the third quarter. One such example in the mutual funds universe is gold and precious metals. For example, Vanguard Precious Metals and Mining (MUTF:VGPMX) has jumped more than 60% in 2016 but stumbled down 14% in the third quarter. Therefore, the fourth quarter doesn’t show much promise for the funds that invest in gold.

So with that rationale, here are 10 of the best mutual funds for the rest of 2016:

10 Best Mutual Funds for the Rest of 2016: Vanguard Energy Fund (VGENX)

10 Best Mutual Funds for the Rest of 2016: Vanguard Energy Fund (VGENX)Expenses: 0.37%, or $37 annually for every $10,000 invested
Minimum Initial Investment: $3,000

Mutual funds investing in energy stocks have done well in 2016 and one of the best funds to buy into this potential trend is Vanguard Energy Fund (MUTF:VGENX).

VGENX outranks 80% of other energy funds and is crushing the S&P 500 with a year-to-date gain of nearly 29% and positive momentum in the past three months.

The VGENX portfolio is concentrated in pure energy sub-sectors, such as oil, coal and natural gas.

If energy stocks like VGENX top holdings Exxon Mobil Corporation (NYSE:XOM), Pioneer Natural Resources (NYSE:PXD) and Chevron Corporation (NYSE:CVX) can stay on trend for the remainder of 2016, VGENX will be a top performer to finish the year.

10 Best Mutual Funds for the Rest of 2016: T. Rowe Price Emerging Markets (PRMSX)

10 Best Mutual Funds for the Rest of 2016: T. Rowe Price Emerging Markets (PRMSX)Expenses: 1.24%
Minimum Initial Investment: $2,500

Emerging-markets stocks have made a comeback in 2016, and one of the best mutual funds leading the way is T. Rowe Price Emerging Markets Stock Fund (MUTF:PRMSX).

Although performance has slowed in the past few weeks, the last three months show a strong upward trend and PRMSX has a commanding 2016 gain of more than 21%.

In the wake of Brexit and the continued moderation of the U.S. economy, emerging-markets stocks like PRMSX top holdings AIA Group Ltd. (OTCMKTS:AAIGF), Infosys Ltd ADR (NYSE:INFY) and Itau Unibanco Holding (NYSE:ITUB) can continue to look attractive to the investor herd through the end of 2016.

10 Best Mutual Funds for the Rest of 2016: T. Rowe Price Science & Technology Fund (PRSCX)

10 Best Mutual Funds for the Rest of 2016: T. Rowe Price Science & Technology Fund (PRSCX)Expenses: 0.84%
Minimum Initial Investment: $2,500

Technology is another leading sector in 2016 that could keep its positive momentum for the rest of the year and an outstanding fund to take advantage of this potential is T. Rowe Price Science & Technology Fund (MUTF:PRSCX).

Performance for PRSCX in 2016 has it ahead of nearly 90% of tech sector mutual funds with a year-to-date return of 17%, and a majority of that gain coming in the past three months, which bodes well for the fund and the sector for the rest of the year, assuming the trend holds.

PRSCX holds big tech stocks with big momentum like Amazon.com, Inc. (NASDAQ:AMZN) and others like Cisco Systems, Inc. (NASDAQ:CSCO) and 58.com Inc (ADR) (NYSE:WUBA).

10 Best Mutual Funds for the Rest of 2016: Fidelity Select Transportation (FSRFX)

10 Best Mutual Funds for the Rest of 2016: Fidelity Select Transportation (FSRFX)Expenses: 0.81%
Minimum Initial Investment: $2,500

Mutual funds investing in industrial stocks, especially those focusing on transportation, have surged in the past three months. One of the best funds in that category is Fidelity Select Transportation Portfolio (MUTF:FSRFX).

FSRFX is up more than 11% in 2016 and most of that gain occurred over the past three months. This momentum could very well continue for the remainder of the year.

The FSRFX portfolio is concentrated in stocks of companies engaged in the services, manufacturing, design and distribution of the transportation industry.

Top holdings include United Parcel Service, Inc. (NYSE:UPS), Union Pacific Corporation (NYSE:UNP) and American Airlines Group Inc (NASDAQ:AAL).

10 Best Mutual Funds for the Rest of 2016: Dreyfus Small Cap Stock Index (DISSX)

10 Best Mutual Funds for the Rest of 2016: Dreyfus Small Cap Stock Index (DISSX)Expenses: 0.5%
Minimum Initial Investment: $2,500

Small-cap stocks are leading large caps in 2016, and if they keep up their winning pace, Dreyfus Small Cap Stock Index Fund (MUTF:DISSX) is a good bet to stay ahead of the major market indices.

Actively managed small-cap growth and small-cap value mutual funds are doing well in 2016, but the small-blend index funds, which combine both objectives in a low-cost, passive style, is the overall small-cap leader.

DISSX is among the best in this category, with a year-to-date gain of 11.4%, which is ahead of more than 80% of small-cap blend funds and head and shoulders above the S&P 500, which is barely above 7%.

10 Best Mutual Funds for the Rest of 2016: Vanguard Long-Term Bond Index (VBLTX)

Next Page 10 Best Mutual Funds for the Rest of 2016: Vanguard Long-Term Bond Index (VBLTX)Expenses: 0.16%
Minimum Initial Investment: $3,000

The Fed’s lower-for-longer rate policy has pushed up prices for long-term bonds in 2016, and one of the best funds to reap the benefits of this trend is Vanguard Long-Term Bond Index Fund (MUTF:VBLTX).

VBLTX has gained approximately 10.5% year-to-date.

This particular investment idea carries as much uncertainty as promise. Although long-term bonds are leading both the Barclays Aggregate US Bond Index and the S&P 500, the rally for these bonds appears to be losing steam.

The September jobs report was perceived as neutral, which is to say it wasn’t good or bad.

If October’s report meets or exceeds expectations, bond prices will fall and long-term bonds can take the bigger hit. However, if the labor market weakens, bond prices will get new support and long-term bonds will lead the way for fixed income.

10 Best Mutual Funds for the Rest of 2016: Loomis Sayles Bond (LSBRX)

10 Best Mutual Funds for the Rest of 2016: Loomis Sayles Bond (LSBRX)Expenses: 0.89%
Minimum Initial Investment: $2,500

Investors looking for bond funds for the rest of 2016 could do well with well-managed, go-anywhere funds like Loomis Sayles Bond Fund (MUTF:LSBRX).

LSBRX certainly comes with its share of market risk, but investors willing to hold on during turbulent periods can be handsomely rewarded. In 2016 the fund has jumped 9.7% year-to-date, which beats most bond funds, and it’s ahead of major stock indices as well.

Much of the fund’s performance potential comes from high-yield bonds, and 2016’s bounce is partly attributable to the turnaround of foreign bonds post Brexit.

Plus, with legendary fixed-income portfolio manager Dan Fuss involved, investors can rest easy with his 50 years of experience driving the ship.

10 Best Mutual Funds for the Rest of 2016: Vanguard Total Stock Market Index (VTSMX)

10 Best Mutual Funds for the Rest of 2016: Vanguard Total Stock Market Index (VTSMX)Expenses: 0.16%
Minimum Initial Investment: $3,000

If you’re looking for a broadly diversified stock index fund that can cover the right segments of the market for the rest of 2016, Vanguard Total Stock Market Index Fund (MUTF:VTSMX) may be the best fund for the job.

As mentioned previously in this gallery, small-cap stocks have led the market ahead of large caps. However, small-cap stocks carry more market risk, which means they could see bigger price declines should the market take a surprise turn downward.

So, if you want to hold large, high-quality stocks like VTSMX top holdings Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT), but also want to cover smaller capitalizations within the total U.S. stock market that have good momentum in 2016, VTSMX can be a smart holding through the year’s end.

10 Best Mutual Funds for the Rest of 2016: Vanguard Wellesley (VWINX)

10 Best Mutual Funds for the Rest of 2016: Vanguard Wellesley (VWINX)Expenses: 0.23%
Minimum Initial Investment: $3,000

2016 has been a good year for well-managed conservative allocation funds and Vanguard Wellesley Income Fund (MUTF:VWINX).

Mutual funds like VWINX, with just the right mix of stocks and bonds, have managed to achieve superior returns with lower relative risk, which is the ultimate goal for smart investors.

The VWINX portfolio consists of about one-third stocks and two-thirds bonds. The stocks are primarily large caps that pay dividends like Microsoft, Johnson & Johnson (NYSE:JNJ) and Merck & Co., Inc. (NYSE:MRK).

Amazingly, with a conservative mix of stocks and bonds, VWINX has nearly been able to keep up with the S&P 500 with a 5.4% year-to-date return.

10 Best Mutual Funds for the Rest of 2016: Vanguard Short-Term Bond Index (VBISX)

10 Best Mutual Funds for the Rest of 2016: Vanguard Short-Term Bond Index (VBISX)Expenses: 0.16%
Minimum Initial Investment: $3,000

Investors looking to park some money in a low-cost fund with low market risk can take a look at Vanguard Short-Term Bond Index Fund (MUTF:VBISX).

VBISX is the other fund in our gallery that isn’t beating the S&P 500 but it’s definitely one of the best mutual funds to buy if you want assurance of maintaining principal during uncertain times.

The VBISX portfolio invests in bonds with maturities of one to five years and the majority are U.S. Treasuries.

So investors looking for short-term price stability through the rest of 2016 may be attracted to funds like VBISX.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities, although he holds LSBRX and VWINX for some client accounts. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/10/top-mutual-funds-to-buy-rest/.

©2018 InvestorPlace Media, LLC