Best mutual funds for 2018

Finstead Perspectives: Top
Mutual Fund Choices
Best Mutual Funds for 2018: Top 40 Mutual Funds
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Topics
1. Introduction: Our Selection Methodology
2. Top Large-Cap Mutual Funds
3. Top International Mutual Funds
4. Top Specialty and Sector Mutual Funds
5. Top Taxable Fixed Income Mutual Funds
6. Top Tax-Exempt Fixed Income Mutual Funds
7. Top Balanced Mutual Funds
2

Top Mutual Funds Selection
Methodology
 In this presentation we are offering some vetted ideas for investing in mutual funds across the
different segments:
 U.S. and International Equity;
 Specialty (Technology and Healthcare);
 Fixed Income (Taxable and Tax Exempt);
 Balanced (Stock/Bond Mutual Funds).
 Here are our search criteria for the best mutual funds:
 Popular among investors, demonstrated by assets under management north of $1 Billion;
 Above-average returns (in their respective segments);
 No sales loads or 12b-1 fees (so investors are not paying sales commissions or marketing expenses);
 Low expense ratios, typically below 1%.
2

Topics
5

#1 Vanguard 500 Index Admiral (VFIAX)
 Vanguard 500 Index Admiral (VFIAX) is the most popular fund by assets. It tracks the
performance of the S&P 500 benchmark index. VFINX invests all of its assets in the stocks
that make up S&P 500 with the same approximate weightings as the Index (this is a
passive fund).
 VFIAX expense ratio is 0.04%, and its minimum investment requirement is $10K.
 Here is what VFIAX returned over the different time frames:
 1-month return is 2.33%;
 1-year return is 23.59%;
 3-year annualized return is 10.74%;
 5-year annualized return is 15.14%.
2

#1 VFIAX Performance
7

#2 Vanguard 500 Index Investor (VFINX)
8
 Vanguard 500 Index Investor (VFINX) is very similar to VFIAX (see mutual fund #1)—it
tracks S&P 500 as well. The main difference is, VFINX requires a minimum $3K
investment, and its expense ratio is 0.14%.
 VFINX returns are slightly lower than those of VFIAX, but the differences are almost
negligible:

#2 VFINX Performance
9

#3 Vanguard Institutional Index Fund Institutional
Shares (VINIX)
 Vanguard Institutional Index Fund Institutional Shares (VINIX) also tracks S&P 500, but
its minimum investment requirement is $5.0 Million, and its expense ratio is 0.035%.
 You may have access to VINIX even if you don’t satisfy the minimum investment
requirement—check out with your advisor or 401K plan administrator. The benefit of using
VINIX over VFINX and VFIAX is a lower expense ratio.
 There is also an Institutional Plus version of the fund (VIIIX), which expense ratio is 0.02%
and its minimum investment requirement is $100.0 Million.
10

#3 VINIX Performance
11

#4 Vanguard Total Stock Market Index Fund
Admiral Shares (VTSAX)
 Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) tracks the performance of a
benchmark index that measures the investment return of the overall stock market. VTSAX
employs a "passive management" approach designed to track the performance of the CRSP US
Total Market Index.
 VTSAX historical returns have been as follows:
 VTSAX expense ratio is 0.04%, and its minimum requirement investment is $10K.
 Unlike VFIAX/VFINX which cover roughly top 500 US stocks by market cap, VTSAX number of
holdings is over 3,500.
12

#4 VTSAX Performance
13

Investor Shares (VTSMX)
 Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) also employs a
"passive management" approach designed to track the performance of the CRSP US Total
Market Index, just like VTSAX.
 The key difference is, VTSMX minimum investment requirement is $3K (vs. $10 for
VTSAX), and its expense ratio is 0.15%.
 VTSMX historical returns have been as follows:
14

#5 VTSMX Performance
15

Institutional Plus Shares (VSMPX)
 Vanguard Total Stock Market Index Fund Institutional Plus Shares (VSMPX) also tracks
CRSP US Total Market Index, just like VTSMX and VTSAX.
 There are to versions of the fund: institutional, with the minimum investment requirement of
$5.0 Million and the expense ratio of 0.035%.
 The Institutional Plus version has the minimum investment requirement of $100.0 Million
and the expense ratio of 0.02%.
 You may have access to VSMPX even if you don’t satisfy the minimum investment
requirement—check out with your advisor or 401K plan administrator. The benefit of using
VSMPX over VTSMX and VTSAX is a lower expense ratio.
16

#6 VSMPX Performance
17

#7 Vanguard Total International Stock Index
Fund Investor Shares (VGTSX)
 Vanguard Total International Stock Index Fund Investor Shares (VGTSX) tracks the
performance of the FTSE Global All Cap ex US Index, a free-float-adjusted market
capitalization weighted index designed to measure equity market performance of
companies located in developed and emerging markets, excluding the United States.
 VGTSX expense ratio is 0.18%, and its minimum investment requirement is $10K.
 VGTSX has generated the following historical returns:
18

#7 VGTSX Performance
19

Fund Admiral Shares (VTIAX)
 Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) tracks the
performance of the FTSE Global All Cap ex US Index. It’s an Admirals version of the
VGTSX fund.
 VTIAX minimum initial investment is $10K.
 VTIAX expense ratio is 0.11%.
20

#8 VTIAX Performance
21

#9 Fidelity Contrafund Fund (FCNTX)
 Fidelity Contra fund Fund (FCNTX) seeks capital appreciation. This is an active fund.
 The Fund invests in securities of companies that are undervalued, according to the Fund
managers. The Fund normally invests primarily in common stocks and may invest in both
domestic and foreign issuers.
 FCNTX minimum initial investment is $2,500, while its expense ratio is 0.68%. FCNTX number
of holdings is 307.
 Here are the historical returns FCNTX generated:
22

#9 FCNTX Performance
23

Topics
24

Fund Institutional Plus Shares (VTPSX)
 Vanguard Total International Stock Index Fund Institutional Plus Shares (VTPSX) tracks the
performance of the FTSE Global All Cap ex US Index, a market cap weighted index designed to
measure the performance of companies located in developed and emerging markets, excluding
the United States.
 This is a sister fund to VGTSX; however, its minimum initial investment is $100,000,000.
 VTPSX expense ratio is 0.07%, and the number of holdings is 5,922.
 You may have access to VTPSX via your investment advisor / 401K plan administrator.
 VTPSX historical returns are as follows:
25

#10 VTPSX Performance
26

Fund Admiral Shares (VTIAX)
 Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) tracks the
performance of the FTSE Global All Cap ex US Index, just like VGTSX and VTPSX.
 This is an Admirals share version of the fund, with the minimum initial investment of $10K;
higher than that of VGTSX ($3K), but way lower than that of VTPSX.
 VTIAX expense ratio is 0.11%.
27

#11 VTIAX Performance
28

#12 Dodge & Cox International Stock Fund
(DODFX)
 Dodge & Cox International Stock Fund (DODFX) seeks long-term growth of principal and
income by investing primarily in a diversified portfolio of equities issued by non-U.S. companies
from at least three different foreign countries, including emerging markets.
 DODFX expense ratio is 0.64%. While we normally wouldn’t recommend funds that are as
expensive as this one, DODFX historical performance, adjusted for expenses and risk, has
been on par with, or better than the index international mutual funds (such as VGTSX).
 DODFX historical returns are as follows:
 1-month return is -0.54%;
29

#12 DODFX Performance
30

#13 Oakmark International Fund Investor
Class (OAKIX)
 Oak mark International Fund Investor Class (OAKIX) invests in a diversified portfolio of
international securities which are priced below their ‘long-term value’. There are no
geographic limits on the Fund's non-U.S. investments.
 OAKIX expense ratio is 1%, which on the high side, but it’s justified by a superior risk-
adjusted return.
 OAKIX financial performance is as follows:
31

#13 OAKIX Performance
32

#14 Vanguard International Growth Fund
Admiral Shares (VWILX)
 Vanguard International Growth Fund Admiral Shares (VWILX) invests in major equity markets
outside the United States. The fund’s managers employ fundamental research to construct
portfolios of growth stocks in developed and emerging markets. This is an active fund.
 The fund managers use fundamental research to identify high-quality companies with above-
average growth potential in countries around the world. There are two managers overseeing
independent sub portfolios—which increases diversification.
 VWILX minimum initial investment is $50,000, while its expense ratio is 0.32%.
 VWILX performance is as follows:
 5-year annualized return is 11.02%
33

#14 VWILX Performance
34

#15 MJFOX Matthews Japan Fund
Investor Class
 Matthews Japan Fund Investor Class (MJFOX) seeks long-term capital appreciation through
investment in the stocks of Japanese companies.
 The minimum initial investment in the Fund is $2,500.
 MJFOX expense ratio is 0.98%; however, its returns have been outstanding in the past 5-10
years:
 You should take a further look into this fund if you’re looking to gain exposure to the Japanese
market.
35

#15 MJFOX Performance
36

#16 Vanguard International Explorer
Fund Investor Shares (VINEX)
 Vanguard International Explorer Fund Investor Shares (VINEX) seeks long-term capital
appreciation by investing primarily in the equity securities of smaller international companies
(which generally have market capitalizations of $2.5 billion or less at the time of investment).
 VINEX is an active fund with the expense ratio is 0.41% and a minimum initial investment of
$3,000.
 VINEX historical returns are as follows:
37

#16 VINEX Performance
38

Topics
39

#17 Fidelity Select Semiconductors Portfolio
(FSELX)
 Fidelity Select Semiconductors Portfolio (FSELX) primarily in companies engaged in the
design, manufacture, or sale of electronic components (semiconductors, connectors,
printed circuit boards and other components), equipment vendors, component distributors
and vendors of instruments and electronic systems. This is an active fund.
 FSELX performance is as follows:
 FSELX expense ratio is 0.77%, while its minimum initial investment is $2,500.
40

#17 FSELX Performance
41

#18 T. Rowe Price Global Technology Fund
(PRGTX)
 T. Rowe Price Global Technology Fund (PRGTX) provides long-term capital growth by
investing at least 65% of total assets in the common stocks of technology companies
around the world. This is an active fund.
 PRGTX performance is as follows:
 PRGTX expense ratio is 0.9%. Its minimum initial investment is $2,500.
42

#18 PRGTX Performance
43

#19 T. Rowe Price Science and
Technology Fund (PRSCX)
 T. Rowe Price Science and Technology Fund (PRSCX) seeks long-term capital
appreciation by investing at least 80% of net assets in the common stocks of technology
companies. This is an active fund.
 PRSCX performance is as follows:
 PRSCX expense ratio is 0.83%. PRSCX minimum initial investment is $2,500.
44

#19 PRSCX Performance
45

#20 Fidelity Select Software and IT
Services Portfolio (FSCSX)
 Fidelity Select Software and IT Services Portfolio (FSCSX) invests at least 80% of the
assets in securities of companies engaged in software or information-based services. This
is an active fund.
 FSCSX expense ratio is 0.76%. The minimum investment requirement is $2,500.
 Its performance is as follows:
46

#20 FSCSX Performance
47

#21 Fidelity Select Medical Technology
and Devices Portfolio (FSMEX)
 Fidelity Select Medical Technology and Devices Portfolio (FSMEX) normally invests at least
80% of the assets in securities of companies principally engaged in medical equipment and
devices. This is an active fund.
 FSMEX performance is as follows:
 FSMEX expense ratio is 0.76%. Its minimum investment requirement is $2,500.
48

#21 FSMEX Performance
49

#22 Fidelity Select IT Services Portfolio
(FBSOX)
 Fidelity Select IT Services Portfolio (FBSOX) invests at least 80% of assets in securities of
companies principally engaged in providing information technology services. The fund invests in
domestic and foreign issuers and uses fundamental analysis of factors such as each issuer's
financial condition and industry position, as well as market and economic conditions, to select
investments. The fund’s management style is active.
 FBSOX historical returns are as follows:
 FBSOX expense ratio 0.79%, and the minimum investment requirement is $2,500.
50

#22 FBSOX Performance
51

#23 Fidelity Select Technology Portfolio
Report (FSPTX)
 Fidelity Select Technology Portfolio Report (FSPTX) invests at least 80% of assets in securities
of technology companies. The fund invests in domestic and foreign issuers. It uses fundamental
analysis of factors such as each issuer's financial condition and industry position, as well as
market and economic conditions, to select investments. The fund is active.
 FSPTX performance is as follows:
 FSPTX minimum initial investment is $2,500. FSPTX expense ratio is 0.77%.
52

#23 FSPTX Performance
53

#24 USAA NASDAQ-100 Index Fund
(USNQX)
 USAA NASDAQ-100 Index Fund (USNQX) investment seeks to match, before fees and
expenses, the performance of the stocks composing the Nasdaq-100 Index. The fund's principal
investment strategy is, under normal market conditions, to invest at least 80% of the fund's
assets in the common stocks of companies composing the Nasdaq-100 Index. The Nasdaq-100
Index represents 100 of the largest nonfinancial stocks traded on the Nasdaq Stock Exchange.
 USNQX management style is passive. Its expense ratio is 0.53%, while the minimum
investment requirement is $3,000.
 USNQX performance is as follows:
54

#24 USNQX Performance
55

#25 Fidelity Select Biotechnology
Portfolio (FBIOX)
 Fidelity Select Biotechnology Portfolio (FBIOX) invests at least 80% of assets in securities
of biotechnology companies. The fund invests in domestic and foreign issuers. It uses
fundamental analysis of factors such as each issuer's financial condition and industry
position, as well as market and economic conditions to select investments.
 FBIOX expense ratio 0.75%, while the minimum investment requirement is $2,500.
 FBIOX performance is as follows:
56

#25 FBIOX Performance
57

#26 T. Rowe Price Health Sciences Fund
(PRHSX)
 T. Rowe Price Health Sciences Fund (PRHSX) invests at least 80% of its net assets (including
any borrowings for investment purposes) in the common stocks of health sciences companies
(health care, medicine, or the life sciences). While the fund can invest in companies of any
size, the majority of fund assets are expected to be invested in large- and mid-capitalization
companies. This is an active fund.
 PRHSX expense ratio 0.77%, while the minimum investment requirement is $2,500.
 PRHSX performance has been as follows:
58

#26 PRHSX Performance
59

#27 Fidelity Advisor Biotechnology Fund
I Class (FBTIX)
 Fidelity Advisor Biotechnology Fund I Class (FBTIX) invests at least 80% of assets in
securities of biotechnology companies. The fund invests in domestic and foreign issuers. It
uses fundamental analysis of factors such as each issuer's financial condition and industry
position, as well as market and economic conditions, to select investments.
 FBTIX performance is as follows:
 FBTIX minimum initial investment is $2,500, and its expense ratio is 0.78%.
60

#27 FBTIX Performance
61

#28 Fidelity Select Medical Technology
and Devices Portfolio (FSMEX)
 Fidelity Select Medical Technology and Devices Portfolio (FSMEX) invests at least 80% of
assets in securities of medical equipment and devices companies. The fund invests in domestic
and foreign issuers. It uses fundamental analysis of factors such as each issuer's financial
condition and industry position, as well as market and economic conditions to select
investments.
 FSMEX performance is as follows”
 FSMEX expense ratio is 0.76%, while its minimum initial investment requirement is $2,500.
62

#28 FSMEX Performance
63

Topics
64

#29 Vanguard Total Bond Market Index
Fund Admiral Shares (VBTLX)
 Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) tracks Bloomberg Barclays U.S.
Aggregate Float Adjusted Index, which reflects a wide spectrum of public, investment-grade, taxable, fixed
income securities in the United States. That includes government, corporate, and international dollar-
denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more
than 1 year.
 This is a broad-base fixed income ETF, passive by management style.
 VBTLX expense ratio is 0.05%, while VBTLX minimum initial investment is $10,000 (typical of Vanguard
Admiral Shares funds).
 VBTLX performance is the following:
65

#29 VBTLX Performance
66

#30 Vanguard Total Bond Market II Index
Fund Investor Shares (VTBIX)
 Vanguard Total Bond Market II Index Fund Investor Shares (VTBIX) tracks the
performance of the Barclays Capital U.S. Aggregate Bond Index, and will maintain a dollar-
weighted average maturity consistent with that of the index. The Index measures
investment-grade, taxable fixed income securities in the U.S.
 VTBIX expense ratio 0.09%, while its minimum initial investment requirement is $0.
 VTBIX has generated the following returns:
67

#30 VTBIX Performance
68

#31 PIMCO Total Return Fund
Institutional Class (PTTRX)
 PIMCO Total Return Fund Institutional Class (PTTRX) invests at least 65% of its total assets in a
diversified portfolio of fixed income instruments of varying maturities, which may be represented by
forwards or derivatives such as options, futures contracts, or swap agreements.
 It invests primarily in investment-grade debt securities but may invest up to 20% of its total assets in high
yield securities. It may invest up to 30% of its total assets in securities denominated in foreign currencies
and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers.
 PTTRX expense ratio 0.47%, while its minimum initial investment requirement is $25,000.
 PTTRX performance is as follows:
69

#31 PTTRX Performance
70

#32 Dodge & Cox Income Fund (DODIX)
 Dodge & Cox Income Fund (DODIX) is a bond fund that seeks a high and stable rate of current
income. The fund invests in a diversified portfolio of bonds and other debt securities. Under
normal circumstances, the fund will invest at least 80% of its total assets in (1) investment-
grade debt securities and (2) cash equivalents.
 ‘Investment grade’ means securities rated Baa3 or higher by Moody's Investors Service, or
BBB- or higher by Standard & Poor's.
 DODIX expense ratio is 0.43%, and its minimum investment requirement is $2,500.
 DODIX performance has been the following:
71

#32 DODIX Performance
72

#33 Double Line Total Return Bond Fund
Class I (DBLTX)
 Double Line Total Return Bond Fund Class I (DBLTX) invests at least 80% of its net assets in bonds,
including debt securities and other fixed-income instruments issued by various governmental or private-
sector entities.
 DBLTX falls in the intermediate-term bond category. Intermediate-term bonds are those with maturities in
the three- to 10-year range. This fund focuses heavily on bonds that are backed by mortgages which can
enhance return, but also increase risk.
 The top holding of DBLTX is US Treasury Note 1.625%.
 DBLTX expense ratio is 0.47%, and its minimum investment requirement is $100,000.
 DBLTX returns are as follows:
73

#33 DBLTX Performance
74

#34 PIMCO Income Fund Institutional
Class (PIMIX)
 PIMCO Income Fund Institutional Class (PIMIX) is a bond fund that seeks to maximize current
income. PIMIX typically invests minimum 65% of its total assets in a multi-sector portfolio of
fixed income instruments of varying maturities. The Fund will generally allocate its assets
among several investment sectors.
 PIMIX holdings are U.S. government obligations, foreign bonds, and high-yield domestic debt
securities. The duration of holdings is between zero and eight years.
 DODIX expense ratio is 0.45%, and its minimum investment requirement is $25,000.
 PIMIX has generated the following returns:
75

#34 PIMIX Performance
76

Topics
77

#35 Vanguard Intermediate-Term Tax-
Exempt Fund Admiral Shares (VWIUX)
 Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX) invests in
municipal debt issues with average maturities of 7 to 12 years.
 VWIUX expense ratio is 0.09%, and its minimum investment is $50K.
 VWIUX has generated the following returns:
78

#35 VWIUX Performance
79

#36 Vanguard Limited-Term Tax-Exempt
Fund Admiral Shares (VMLUX)
 Vanguard Limited-Term Tax-Exempt Fund Admiral Shares (VMLUX) seeks to provide
investors with a high level of current income exempt from Federal income taxes primarily
through investment in high-quality municipal securities with an average maturity of 2 to 5
years.
 VMLUX expense ratio is 0.09%, and the minimum investment is $50K.
 VMLUX has generated the following returns:
80

#36 VMLUX Performance
81

#37 Vanguard Short-Term Tax-Exempt
Fund Class Admiral (VWSUX)
 Vanguard Short-Term Tax-Exempt Fund Class Admiral (VWSUX) provides investors with a
high level of current income exempt from Federal income taxes primarily through
investment in high-quality municipal securities, with a maturity of 1 to 2 years.
 VWSUX expense ratio is 0.09%, and the minimum investment is $50K.
 VWSUX has generated the following returns:
82

#37 VWSUX Performance
83

Topics
84

#38 Vanguard Wellington Fund Admirals
Shares (VWENX)
 Vanguard Wellington Fund Admirals Shares (VWENX) seeks conservation of principal,
reasonable income and capital appreciation without undue risk, by investing 60% to 70% of
its assets in common stocks and 30% to 40% in bonds.
 VWENX expense ratio is 0.16%, while its minimum investment amount is $50K.
 VWENX returns are as follows:
85

#38 VWENX Performance
86

#39 T. Rowe Price Capital Appreciation
Fund (PRWCX)
 T. Rowe Price Capital Appreciation Fund (PRWCX) seeks long-term capital appreciation by
investing primarily in the common stocks of established U.S. companies. Common stocks
typically constitute at least half of total assets. The remaining assets are invested in other
securities, including convertible securities, corporate and government debt.
 PRWCX expense ratio is 0.16%; there is no minimum investment requirement.
 PRWCX returns are as follows:
87

#39 PRWCX Performance
88

#40 Fidelity Balanced Fund (FBALX)
 Fidelity Balanced Fund (FBALX) seeks income and capital growth by investing 60% of its
assets in stocks and other equity securities and the remainder in bonds and other debt
securities, including lower-quality debt securities, when its outlook is neutral. It invests at
least 25% in fixed-income senior securities. This is an active fund.
 FBALX expense ratio is 0.55%; its minimum investment requirement is $2,500.
 FBALX returns are as follows:
89

#40 FBALX Performance
90

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