The Best Mutual Fund Investment for 2015 and Beyond

Maybe you won’t find the single best mutual fund investment for 2015, but you can get hooked up with some of the best funds around if you know what to look for. We’re talking about both the stock and bond variety here, and if you think that the best funds for 2015 will be those with the best mutual fund investment management team – think again.

These packaged investments are large professionally managed portfolios of securities (like stocks and bonds) where investors pool money by buying shares. They all charge for their services and claim to offer great service and some of the best funds around. Some tout past investment performance, claiming to have the best mutual fund investment team in the business. In the years leading up to 2015, you might be surprised to learn what the best funds really were.

Over the years a few things have become abundantly clear. One of them is the fact that the best mutual fund investment one year is rarely the best the next year. In fact it is often a disappointment, and sometimes the big loser. This is partly because of changing market conditions. For example, when high-tech stocks are hot the aggressive growth sector often sports the best funds in terms of total return. When these stocks sell off all competitors in the sector take a hit while the most aggressive (often previous top performers) get hardest hit.

Another reality is that no investment company has a track record for outperforming the competition on a consistent basis. Even the best mutual fund investment managers have years when they actually under-perform their benchmarks. Then, there’s a matter of the stock category vs. the bond category for any given year. Simply put, in a bull market the best funds will more than likely be those that invest in stocks. In a bear market the best funds are most often those that invest in bonds.

Looking at 2015 and beyond, picking the best mutual fund investment will be a challenge because both stocks and bonds have recently hit new highs. No one knows for sure which of the two will be the best funds. Neither you nor professional money managers can predict the markets with accuracy. But you can control one major factor that directly affects both fund performance and your net returns for 2015 and beyond: the cost of investing.

The best funds for the past few years have been no-load “index funds”. These are passively managed to simply mimic the performance of major stock and bond indexes vs. trying to outperform them. Since time has vindicated the fact that actively managed funds DO NOT significantly outperform over the longer term, why pay an upfront sales charge (load) of 5% (or more) to invest, and/or 2% or more in ongoing expenses and fees every year for active management? The best mutual fund investment keeps costs low, and never underperforms its benchmark, which is an index.

The cost of investing can be less than ½% per year for expenses. Period. Now let’s get more specific about the best funds for 2015 and beyond. The best mutual fund investment for stocks: one with no load (sales charge) that tracks a major stock index like the S&P 500 Index. This will perform right in line with the market as measured by the same index that actively managed competitors try to beat (and usually can’t due to their high cost of active management).

The best mutual fund investment in the bond arena: one with no load and mid-to-high quality that tracks an intermediate-term bond index. Think of bond funds (which people buy for the dividend income) like this: if you pay a 3% load (sales charge) upfront to buy it and 1% a year for active management fees… if your fund earns 3% a year in dividends you net only 2% a year and lose money the year you buy it if the share price remains unchanged.

The best funds for 2015 and beyond are of the no-load index variety. They never have a bad year relative to the market, and never under-perform their benchmark. Their low cost of investing directly increases your net return. That makes them the best mutual fund investment for your money in 2015 and well beyond.

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