- Fidelity Strategic Dividend & Income Fund (FSDIX): Offers a diversified investment strategy utilizing REITs, convertible securities and preferred stocks.
- Hartford Core Equity Fund Class R5 (HGITX): Seeks exposure to large-cap U.S. stocks trade at relatively attractive valuations.
- Vanguard Explorer Value Fund (VEVFX): Focuses on small and mid-sized U.S. companies that are underpriced by the market.
Wall Street witnessed a volatile Q1 in 2022 when a large number of shares declined close to double digits or even more. The S&P 500 index is down 7% year-to-date (YTD). Therefore, many investors are looking at mutual funds to buy that could now offer better value, lower volatility and a steady income.
As highlighted in a recent industry report, “U.S. long-term mutual funds and exchange-traded funds gathered $88 billion in December, capping off a record year. Investors poured $1.2 trillion into these vehicles in 2021, nearly double the previous annual record of $689 billion set in 2017.”
Mutual funds provide diversification by investing in various vehicles, such as a basket of stocks, bonds, commodities, or hybrid assets. Many mutual funds offer the possibility of capital appreciation as well as dividends.
With that information, here are three mutual funds to buy that could offer a convenient way to spread overall risk and generate a steady income stream.
|FSDIX||Fidelity Strategic Dividend & Income Fund||$17.34|
|HGITX||Hartford Core Equity Fund Class R5||$45.96|
|VEVFX||Vanguard Explorer Value Fund||$43.87|
Fidelity Strategic Dividend & Income Fund (FSDIX)
Dividend Yield: 2.3%
Expense Ratio: 0.7% per year
Our first mutual fund to buy is the Fidelity Strategic Dividend & Income Fund (NASDAQ:FSDIX). It invests in equity securities by allocating assets among four general investment categories: common stocks, real estate investment trusts (REITs), convertible securities and preferred stocks.
In terms of sectoral allocation for FSDIX, we see real estate leading at 16.9%, followed by healthcare at 12.6%, financials at 11.9% and information technology at 9.1%.
The top 10 stocks in the portfolio account for around 17% of its net assets of $5.9 billion. Among them are Procter & Gamble (NYSE:PG), logistics REIT Prologis (NYSE:PLD), Coca-Cola (NYSE:KO), Cisco Systems (NASDAQ:CSCO) and Eli Lilly (NYSE:LLY).
FSDIX has returned a fraction of a percent over the past year, buy it’s down 2.4% YTD. The fund hit a 52-week low in early March. Readers who seek moderate returns with less downside risk might want to keep an eye on FSDIX.
Hartford Core Equity Fund Class R5 (HGITX)
Dividend Yield: 0.63%
Expense Ratio: 0.48% per year
Next up on our list of mutual funds to buy is the Hartford Core Equity Fund Class R5 (NASDAQ:HGITX). The fund provides exposure to large-cap U.S. stocks with improving quality trends, business momentum and attractive relative valuations.
HGITX, which started trading in April 1998, has 75 holdings. IT shares have the highest slice in the portfolio with 28%. Next are names from healthcare (15%), financials (12%) and communication services and consumer discretionary, each at 11%.
The top 10 stocks in the portfolio account for roughly one-third of net assets of $11.8 billion. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and UnitedHealth (NYSE:UNH) are among the most prominent holdings.
HGITX has returned around 2% to its investors over the past 12 months. Yet it is down 8% YTD. The fund is trading at 17.6 times trailing earnings and 4.7 times book value. This mutual fund offers steady returns and could help mitigate overall portfolio volatility over the long term.
Vanguard Explorer Value Fund (VEVFX)
Dividend Yield: 0.7%
Expense Ratio: 0.64% per year
Our final choice in our list of mutual funds to buy is the Vanguard Explorer Value Fund (NASDAQ:VEVFX). The fund invests in small and mid-sized U.S. companies that are offering value and thus are potentially mispriced by the market at this point.
VEVFX has 153 holdings. The portfolio is heavily weighted toward financials (21%), followed by industrials at 18%, information technology at 11% and real estate at 10%.
The top 10 holdings account for almost 18% of net assets of $1.2 billion. Among them are PacWest Bancorp (NASDAQ:PACW), broadcasting and digital media name Nexstar Media (NASDAQ:NXST), packaging solutions provider Silgan (NASDAQ:SLGN), agricultural sciences group FMC (NYSE:FMC) and digital media company Ziff Davis (NASDAQ:ZD).
VEVFX is down 5% YTD. The fund is trading at 15.4 times trailing earnings and 2.1 times book value. Readers with a long term investment horizon could consider researching VEVFX further.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.