Maybe you will not find the best mutual fund investment for 2015, but you can end up with some of the best funds if you know what to look for. We talk about both the variety of stocks and bonds, and if you think the best funds for 2015 will be those with the best mutual fund management team – think twice.
These packaged investments are large portfolios of professionally managed securities (such as stocks and bonds) in which investors pool money by buying shares. They charge all their services and claim to offer excellent service and some of the best funds. Some boast of past performance, claiming to have the best mutual fund management team in the industry. In the years leading up to 2015, you may be surprised to learn what the best funds really were.
Over the years, some things have become perfectly clear. One of them is the fact that the best investment in one year mutual fund is rarely the best of the following year. In fact, it's often a disappointment and sometimes a big loser. This is partly because of changing market conditions. For example, when high-tech stocks are booming, the aggressive growth sector often sports the best funds in terms of total return. When these shares are sold, all competitors in the industry suffer a blow while the most aggressive (often the best) are the hardest hit.
Another reality is that no investment company has ever done better than the outperforming competition. Even the best mutual fund managers have years in which they have underperformed their benchmarks. Then there is a question of the class of shares in relation to the category of obligations for a given year. In simple terms, in a bull market, the best funds will probably be those investing in stocks. In a bear market, the best funds are most often those who invest in bonds.
Starting in 2015, it will be difficult to choose the best investment in mutual funds, as stocks and bonds have recently reached new heights. Nobody knows for sure which of them will be the best fund. Neither you nor the professional fund managers can predict the markets accurately. However, you can control a major factor that directly affects the fund's performance and your net returns for 2015 and subsequent years: the cost of investing.
The best funds of recent years are the "index funds" without charge. These are managed passively to simply mimic the performance of the main stock and bond indices, instead of trying to outperform them. For some time now, the fact that actively managed funds do NOT significantly outperform in the long run explains why paying an acquisition fee (expense) of 5% (or more) to invest, and / or 2% or more in overhead costs each year for active management? The best investment in mutual funds helps keep costs to a minimum and never underperform its benchmark, which is an index.
The cost of investment can be less than ½% per year for expenses. Period. Let's take a closer look at the best funds for 2015 and beyond. The best investment in mutual funds for stocks: the no-cost acquisition (acquisition costs) that tracks a major stock index such as the S & P 500 index. It will work online with the market, as measured by the same index that actively managed competitors attempt to beat (and which generally can not because of their high cost of active management).
The best investment in bond mutual funds: a no-load, mid-to-high investment that follows a mid-term bond index. Think of bond funds (which people buy for dividend income) like this: if you pay an initial commission of 3% (acquisition costs) to buy it and 1% per year for the costs of active management … if your fund earns 3% dividend year, you only earn 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 in the no-load index category. They never have a bad year compared to the market and never underperform their benchmark. Their low investment cost directly increases your net return. This makes it the best mutual fund investment for your money in 2015 and beyond.