20 Largest Mutual Funds

Most investors may have invested in mutual funds through their brokerage or retirement account (IRA or 401k plan). More than 50% of American households own a mutual fund. The stock market or bond market aren’t going away anytime soon – but it’s certainly one that investors can and should be a lot smarter about if they pick to keep mutual funds in their portfolios.

As a prospective buyer, you need to ask whether you should invest in the biggest and most popular mutual funds. Are these popular mutual funds really worth your money? The answer isn’t as easy to find as you might think. You can find many companies which provide ratings on mutual funds including Morningstar, US News, Lipper, Forbes, Money, Kiplinger, etc.

Popular Mutual Funds for Investment

The top 20 largest mutual funds are:

1. Vanguard Total Stock Market Index Fund (VTSMX) - $343 billion
2. PIMCO Total Return Fund (PTTAX) - $223 billion
3. Vanguard 500 Index Fund (VFINX) - $176 billion
4. American Funds Growth Fund of America Fund (AGTHX) - $139 billion
5. Vanguard Total International Stock Index Fund (VGTSX) - $129 billion
6. American Funds Europacific Growth Fund (AEPGX) - $125 billion
7. Vanguard Total Bond Market Index Fund (VBMFX) - $119 billion
8. Fidelity Contrafund (FCNTX) - $106 billion
9. Franklin Income Fund (FKINX) - $94 billion
10. American Funds Capital Income Builder Fund (CAIBX) - $94 billion
11. American Funds Income Fund of America Fund (AMECX) - $94 billion
12. American Funds Capital World Growth & Income Fund (CWGIX) - $87 billion
13. Vanguard Wellington Fund (VWELX) - $85 billion
14. Vanguard Total Bond Market II Index Fund (VTBIX) - $83 billion
15. Fidelity Spartan 500 Index Fund (FUSEX) - $75 billion
16. American Funds American Balanced Fund (ABALX) - $75 billion
17. American Funds Investment Company of America Fund (AIVSX) - $73 billion
18. American Funds Washington Mutual Fund (AWSHX) - $73 billion
19. Templeton Global Bond Fund (TPINX) - $73 billion
20. American Funds Fundamental Inventors Fund (ANCFX) - $69 billion

Index Funds

Index funds are popular funds in 401k plan or retirement account (IRA). Some of the best index mutual funds are provided by Vanguard & Fidelity.

Pros:

• Index funds are very inexpensive relative to actively managed stock funds
• It provides diverse selection of US companies than funds tracking the index such as S&P 500, etc.
• There is no sales load.

Cons:

• These funds will not beating its index, so don’t expect a super return.

Actively Managed Funds

While actively managed funds has become less popular among investors, mutual funds offered by American, Fidelity, and Franklin Templeton can enhance your performance or returns.

More: Top 401k Mutual Funds

Pros:

• The mutual funds’ performance has been better for the past 5 years.
• American Funds has a reputation for attracting talented managers and analysts.
• They provide fairly good sector exposure.

Cons:

• They are very expensive. Some of these mutual funds may have sales load which can reduce your total return especially Class A or C.
• High asset base could limit investment options
• American Funds in general are suffering from a massive outflow of assets.

Should You Invest in Mutual Funds?

It’s worth noting some of the funds invest mainly on dividend yielding equities. Companies paying dividends are generally well-known with theoretically less volatile business types. In other words, the companies can act more defensively relative to companies in economically sensitive sectors like Biotech, Technology and Basic Materials.

So what have we learned? Despite great long-term track records for some of the more popular active funds, they don’t always outperform. In many cases, you can invest in better choices such as ETFs (Exchange Traded Funds) and index funds. You may achieve similar or even greater returns with low cost.

Vanguard’s lower cost option makes its funds more competitive, but in most cases I would endorse their ETF counterparts where available. And when choosing a passive approach, please look carefully on their index funds benchmark.

Fund Performance & Expense fees

1. Vanguard Total Stock Market Index Fund (VTSMX) - Performance 1 Year: 24.00% Expense Ratio: 0.17%
2. PIMCO Total Return Fund (PTTAX) - Performance 1 Yr: 5.54% Expense Ratio: 0.85%
3. Vanguard 500 Index Fund (VFINX) - Performance 1 Yr: 24.65% Expense Ratio: 0.17%
4. American Funds Growth Fund of America Fund (AGTHX) - Performance 1 Yr: 24.44% Expense Ratio: 0.70%
5. Vanguard Total International Stock Index Fund (VGTSX) - Performance 1 Yr: 5.45% Expense Ratio: 0.22%
6. American Funds Europacific Growth Fund (AEPGX) - Performance 1 Yr: 16.60% Expense Ratio: 0.84%
7. Vanguard Total Bond Market Index Fund (VBMFX) - Performance 1 Yr: 5.45% Expense Ratio: 0.20%
8. Fidelity Contrafund (FCNTX) - Performance 1 Yr: 24.40% Expense Ratio: 0.66%
9. Franklin Income Fund (FKINX) - Performance 1 Yr: 17.51% Expense Ratio: 0.62%
10. American Funds Capital Income Builder Fund (CAIBX) - Performance 1 Yr: 16.51% Expense Ratio: 0.61%
11. American Funds Income Fund of America Fund (AMECX) - Performance 1 Yr: 18.03% Expense Ratio: 0.58%
12. American Funds Capital World Growth & Income Fund (CWGIX) - Performance 1 Yr: 20.25% Expense Ratio: 0.80%
13. Vanguard Wellington Fund (VWELX) - Performance 1 Yr: 17.02% Expense Ratio: 0.26%
14. Vanguard Total Bond Market II Index Fund (VTBIX) - Performance 1 Yr: 5.55% Expense Ratio: 0.12%
15. Fidelity Spartan 500 Index Fund (FUSEX) - Performance 1 Yr: 24.75% Expense Ratio: 0.10%
16. American Funds American Balanced Fund (ABALX) - Performance 1 Yr: 17.88% Expense Ratio: 0.61%
17. American Funds Investment Company of America Fund (AIVSX) - Performance 1 Yr: 25.95% Expense Ratio: 0.61%
18. American Funds Washington Mutual Fund (AWSHX) - Performance 1 Yr: 22.60% Expense Ratio: 0.60%
19. Templeton Global Bond Fund (TPINX) - Performance 1 Yr: 9.71% Expense Ratio: 0.86%
20. American Funds Fundamental Inventors Fund (ANCFX) - Performance 1 Yr: 23.27% Expense Ratio: 0.63%

Updated on 9/4/2014