For investors worried about a possible downturn, the below list of safest mutual funds may provide some much-needed confidence. According to the U.S. Securities and Exchange Commission (SEC), “[a] mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.”
Among the reasons that people consider the best mutual funds include professional management, diversification, and affordability. Because fund managers conduct market research on your behalf, participants enjoy a set-it-and-forget-it framework. As well, investors can enjoy a wide range of opportunities at a relatively low dollar amount.Finally, the present jitters in the capital markets prioritize wealth protection. If you’re looking to make it through this inning as opposed to swinging for homers, the below secure mutual funds to buy may allow you to sleep better at night.
Blackrock Exchange Portfolio | $1,836.46 | |
T. Rowe Price Dividend Growth Fund | $66.00 | |
Vanguard Long-Term Investment-Grade Fund | $7.93 |
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BlackRock Exchange Portfolio (STSEX)
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Easily one of the top-rated examples of the safest mutual funds, the BlackRock Exchange Portfolio (MUTF:STSEX) seeks long-term growth of capital and consequent long-term growth of income, per its prospectus. It further states that it invests largely in a diversified and supervised portfolio of common stocks or convertible securities, with the main focus being growth potential over a number of years. Since the beginning of this year, STSEX gained almost 11%.
In terms of asset allocation, the BlackRock Exchange Portfolio features a heavy tilt toward equities at 91.3% exposure to stocks. Coming in a very distant second place is foreign stocks, which account for 8.2% of STSEX’s total holdings. Finally, the rest goes to cash.
For individual holdings, Microsoft (NASDAQ:MSFT) grabs the pole position by an extremely wide margin at 26.64% of total net assets. Coming in second place is Berkshire Hathaway (NYSE:BRK-B) at 11.62%, followed closely by General Dynamics (NYSE:GD) at 9.58%.Finally, STSEX features a net expense ratio of 0.77% and management fees of 0.5%. While the latter is in line with category averages, the former slips beneath the category average of 0.86%. Thus, it makes a great case for the best mutual funds to consider.
T. Rowe Price Dividend Growth Fund (PRDGX)
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Another prudent idea for safest mutual funds, the T. Rowe Price Dividend Growth Fund (MUTF:PRDGX) looks to offer investors a healthy dose of reliable passive income. Although a desirable attribute in any market cycle, income garners a premium these days because of various economic ambiguities. Per its prospectus, the T. Rowe Price Dividend has assets totaling almost $21.57 billion invested in 105 different holdings.
Since the beginning of this year, PRDGX gained a little more than 3%. While not the most exciting of performances, the mutual fund did pop up relatively sharply in recent sessions. Currently, the fund features an asset allocation of 88% in domestic stocks. In a distant second place is foreign stocks, sitting at 7.8%. The rest of the holdings (4.3%) are in cash.
As with BlackRock Exchange Portfolio, Microsoft holds the top spot for the PRDGX fund at 4.21% of total assets. Apple (NASDAQ:AAPL) represents the second-biggest equity holding at 2.82% of all assets, followed by UnitedHealth Group (NYSE:UNH) at 2.8%.
Finally, PRDGX’s net expense ratio clocks in at 0.64% while its management fee is 0.48%. Both stats rank below their respective category averages, though much more so for the former. Thus, PRDGX makes a case for secure mutual funds to buy.
Vanguard Long-Term Investment-Grade Fund (VWESX)
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Another interesting idea for reliable mutual funds investment, the Vanguard Long-Term Investment-Grade Fund (MUTF:VWESX) centers on corporate bonds. Per its prospectus, VWESX invests primarily in high-quality investment-grade bonds that are issued by corporations and that have an average maturity in the 15- to 25-year range. Since the beginning of this year, units of the mutual fund only gained less than 1%. In the trailing year, they’re down 8%.
As a result, Vanguard Long Term doesn’t immediately strike onlookers as one of the top-performing mutual funds. Holistically, though, VWESX deserves closer attention, especially as we enter uncharted and ambiguous territory. For instance, its holdings carry a motif of safety and stability. Its top two holdings are U.S. Treasury bonds at 1.2% and 0.95% of net assets, respectively. In third place stands the debt holdings of Microsoft at 0.89% of all assets.
Overall, the VWESX features the most exposure to domestic bonds at 89.6%. Coming to a very distant second place is foreign bonds at 9.5%. The rest of the allocation (1.1%) sits in cash.In conclusion, what helps make the case that VWESX ranks among the safest mutual funds focuses on the underlying fees. Specifically, its net expense ratio and management fees are 0.21% and 0.2%, respectively. In contrast, the category averages are 0.56% and 0.38%, respectively.
On the date of publication, Josh Enomoto 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.comPublishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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As an expert in finance and investment, it's clear that the article you've provided discusses the importance of secure mutual funds for investors concerned about a potential downturn. The author highlights the criteria for selecting the best mutual funds, including professional management, diversification, and affordability. I will now provide a detailed breakdown of the concepts and information mentioned in the article:
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Mutual Funds Definition:
- According to the U.S. Securities and Exchange Commission (SEC), a mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.
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Reasons for Choosing Mutual Funds:
- Professional Management: Mutual funds are managed by professionals who conduct market research on behalf of investors.
- Diversification: Mutual funds provide investors with a diversified portfolio, reducing risk by spreading investments across various assets.
- Affordability: Investors can enter the market with a relatively low dollar amount due to the pooled nature of mutual funds.
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Current Market Context:
- The article suggests that the present jitters in the capital markets prioritize wealth protection, leading investors to seek safer investment options.
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List of Secure Mutual Funds:
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BlackRock Exchange Portfolio (STSEX):
- Objective: Seeks long-term growth of capital and income.
- Asset Allocation: 91.3% in equities, 8.2% in foreign stocks, and the rest in cash.
- Top Holdings: Microsoft (26.64%), Berkshire Hathaway (11.62%), General Dynamics (9.58%).
- Expenses: Net expense ratio of 0.77%, management fees of 0.5%.
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T. Rowe Price Dividend Growth Fund (PRDGX):
- Objective: Offers investors reliable passive income.
- Asset Allocation: 88% in domestic stocks, 7.8% in foreign stocks, and the rest in cash.
- Top Holdings: Microsoft (4.21%), Apple (2.82%), UnitedHealth Group (2.8%).
- Expenses: Net expense ratio of 0.64%, management fee of 0.48%.
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Vanguard Long-Term Investment-Grade Fund (VWESX):
- Objective: Centers on corporate bonds with an average maturity of 15 to 25 years.
- Asset Allocation: 89.6% in domestic bonds, 9.5% in foreign bonds, and the rest in cash.
- Top Holdings: U.S. Treasury bonds, Microsoft debt.
- Expenses: Net expense ratio of 0.21%, management fees of 0.2%.
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Performance of the Funds:
- STSEX gained almost 11% since the beginning of the year.
- PRDGX gained a little more than 3% since the beginning of the year.
- VWESX gained less than 1% since the beginning of the year, but its focus on safety and stability is emphasized.
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Author's Opinion:
- The article concludes by suggesting that the mentioned mutual funds make a case for secure investments, considering factors such as performance, asset allocation, and expenses.
In summary, the article provides a comprehensive overview of the criteria for selecting safe mutual funds and introduces three specific funds with detailed information on their objectives, asset allocations, top holdings, and expenses.
