The economy is more volatile and investors need to be cautious. There are bound to be under-performers and over-performers. The following are promising mutual funds that you can invest in this year.
Vanguard 500 Index Fund: A broad index fund, this has a low expense ratio of 0.16 and requires a minimum investment of $3000.
Fidelity Nasdaq Composite Index Fund: Also a broad index fund with an expense ratio of 0.29, you need to have a minimum initial investment of $2500. With the economy in a mature phase, growth stocks are poised to be clear winners. With investments in large cap growth stocks more than half of the funds holdings are in information technology.
Vanguard HealthCare Fund: A sectoral fund with an expense ratio of 0.36, the minimum investment required is $3000. With the healthcare sector receiving a boost after presidential victory, this is one fund to watch this year. About 15% of the fund’s exposure is in biotech stocks, with the rest in healthcare equipment, tech, and managed healthcare services.
Fidelity Select Banking Fund: With an expense ratio of 0.79 and a minimum initial investment of $2500, this fund is a definite gainer. Financial stocks have become more popular post victory. This is an all banking fund with tiny exposure to brokerage and insurance companies.
Fidelity Select Consumer Staples Fund: A sectoral fund can be a good pick to diversify your mutual fund investment portfolio. Investment into this fund is set at a minimum of $2500, and carries a 0.77 expense ratio.
T.Rowe Price Floating Rate: Compared to conventional bond funds, the floating rate fund will weather the fixed rate storm. These bonds adjust on a regular basis and the interest is linked to the LIBOR or US treasury bill rate. With the year expected to witness rising interest rates, floating rate bonds are poised for a value appreciation.
Hussman Strategic Total Return: This fund’s portfolio is primarily comprised of fixed income securities. This helps to hedge against inflation, whilst keeping the market risk to a minimum. A large part of the fund is kept in cash, followed by bonds, and the barest minimum in stocks.
The current economy is in a state of rising rates backed by a mature business cycle. Choose to invest in an array of the above mentioned funds and build your wealth.