For investors looking to avoid the hassle and stress of picking individual stocks, the best mutual funds to buy remain a great option. These funds are comprised of pooled investments. A fund manager manages a mutual fund. These fund managers pick stocks and other investments, and determine their weighting within the fund. As they are actively managed, mutual funds tend to come with higher fees than more passive exchange-traded funds (ETFs) and self-managed portfolios.
While not for everyone, mutual funds can still prove to be a great choice for people who are not comfortable managing their own investments or who don’t want to spend the time needed to research and choose individual stocks. Some mutual funds track select stock market indexes such as the S&P 500 or Nasdaq 100, delivering nearly identical returns. There are also sector specific mutual funds and funds that focus on stocks in specific countries. Whatever a person’s interest, there’s sure to be a mutual fund to meet it.
Here are the three best mutual funds to buy in May 2024.
Vanguard Global Dividend Fund (VIC200)
The Vanguard Global Dividend Fund aims to provide an above-average level of investment income combined with long-term capital growth. The fund invested in high-paying dividend stocks of companies that are situated around the world in order to acheive this objective. Top holdings in the fund include stocks such as Johnson & Johnson (NYSE:JNJ) and Bank of America (NYSE:BAC) in the United States, and TotalEnergies (NYSE:TTE) and Novartis (NYSE:NVS) situated in Europe.
Most of the stocks held in the Vanguard Global Dividend Fund have a dividend yield of 2.50% or greater, as well as a history of steadily increasing their payouts to shareholders. Vanguard manages it and this mutual fund comes with the Vanguard’s low fees. The current management fee associated with the fund is 0.31%, much less than most other actively managed mutual funds. The fund also pays its owners a quarterly dividend payment of 10 cents per unit held. Over the last 12 months, the fund has returned 16%.
iShares Core S&P 500 ETF (IVV)
The iShares Core S&P 500 ETF (NYSEARCA:IVV) is run by asset manager BlackRock (NYSE:BLK). This mutual fund tracks the performance of the S&P 500 index that is comprised of the 500 biggest publicly traded stocks in the U.S. by market capitalization. With the stock market currently in a bull run, the returns on this mutual fund have been excellent over the last year, rising 30%. Through five years, the fund has returned a decent 15% to investors.
As it tracks the S&P 500, the fund’s holdings are the mega-cap stocks that dominate the index, including Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA). Another attractive feature of the fund is its ultra low fees. Currently, BlackRock is charging a management fee of only 0.03%, which is rock bottom for a mutual fund. The iShares Core S&P 500 ETF also pays a quarterly dividend of $1.67 per unit held. For investors wanting a passive way to track the market, this is a great option.
Fidelity Contrafund (FCNTX)
The Fidelity Contrafund (MUTF:FCNTX) says that its objective is to invest in stocks of companies whose value is not fully recognized by the public. That said, the fund is heavily weighted to mega-cap tech. Top holdings include Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN), among other well-known names. The composition of the fund appears to be working with it delivering a 36% return over the last 12 months.
Through five years, this mutual fund has returned 15% to investors. The expense ratio of 0.39% is not the lowest around. However, it is reasonable given the returns. There is no minimum investment amount required with the Fidelity Contrafund. However, if there’s one drawback with this fund it is that it does not pay a dividend. Still, the returns provided are very strong. Already in 2024, the Contrafund has delivered an 18% gain, which is better than the 10% ytd return of the benchmark S&P 500 index. If you are looking for the best mutual funds to buy, start here.
On the date of publication, Joel Baglole held long positions in MSFT and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
