If there is one thing we can take from the year so far, it’s that the stock market under President Donald Trump is likely to be a pogo stick. This doesn’t mean you should fear it or avoid it. The best way to handle volatility is to embrace it and keep a long-term view. If you zoom out enough, you’ll see these upheavals are nothing more than blips in the lifespan of the market. So, strap on your seatbelt, and just remember we’ll all end up in the same place eventually.
One of the best ways to thrive through volatility is with diversification. And one of the best ways to diversify is through funds, which hold dozens or even thousands of securities.
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With the rise of exchange-traded funds, or ETFs, that let you buy and sell throughout the trading day, mutual funds have fallen out of the limelight. But don’t write off the old stalwart of simple, diversified investing just yet.
The following list of the best mutual funds to buy now may prove to skeptics that older investment vehicles still have an important role to play. That’s true whether you’re looking for a tactical way to invest or just seeking a simple index fund with a cost-effective fee structure. Each of the following funds has earned five out of five stars and a gold badge from Morningstar analysts, indicating they have the highest conviction that the fund will continue to outperform its peers or benchmark over a market cycle:
| MUTUAL FUND | ASSETS UNDER MANAGEMENT | EXPENSE RATIO | TRAILING 12-MONTH DIVIDEND YIELD | MINIMUM INVESTMENT |
| Fidelity 500 Index Fund (ticker: FXAIX) | $597.6 billion | 0.015% | 1.3% | $0 |
| Vanguard Wellington Investor Shares (VWELX) | $108 billion | 0.25% | 2.2% | $3,000 |
| Nuveen Quant Small/Mid-Cap Equity (TSMMX) | $1.2 billion | 0.64% | 0.7% | $0 |
| Manning & Napier High Yield Bond W (MHYWX) | $1.3 billion | 0.11% | 8.4% | $0 |
| Dodge & Cox Income I (DODIX) | $94.7 billion | 0.41% | 4.2% | $2,500 ($1,000 if held in an IRA) |
| Vanguard International Core Stock Fund Investor Shares (VWICX) | $2.5 billion | 0.48% | 1.9% | $3,000 |
| Fidelity Pacific Basin (FPBFX) | $692 million | 0.87% | 5.8% | $0 |
Fidelity 500 Index Fund (FXAIX)
FXAIX is proof that ETFs aren’t necessarily the lowest-cost option. With a 0.015% expense ratio, this one is hard to beat. It’s also hard to resist with a $0 investment minimum. So, next time you find yourself eyeing an S&P 500 ETF, make sure to give FXAIX due consideration.
FXAIX is Fidelity’s version of an S&P 500 mutual fund. It invests at least 80% of its assets in the S&P 500. This means you’ll get exposure to the largest names on Wall Street, including Apple Inc. (APPL), Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT). You’ll also get a lot of tech exposure, with over 30% of the portfolio in these types of companies.
Vanguard Wellington Investor Shares (VWELX)
Some trends come and go, but others never fall out of favor. VWELX falls into that latter category. As Vanguard’s oldest mutual fund and the nation’s first balanced fund, the Wellington fund has been a go-to for investors since 1929.
This “distinguished balanced fund” is “guided by experienced managers with significant resources at their disposal,” writes Stephen Margaria, an analyst for Morningstar. “Along with its attractive fees, this fund is a strong choice for investors seeking a steady allocation to stocks and bonds.”
VWELX is about two-thirds stock to one-third bonds, making it an ideal core holding for many portfolios. With stocks from every sector, you’ll get diversification. There’s even a few foreign holdings, though this is one area VWELX may be light on depending on your preference.
Nuveen Quant Small/Mid-Cap Equity (TSMMX)
Large stocks may have more media attention, but there’s an argument for including smaller, lesser-known companies in your portfolio. Namely, smaller companies generally have greater growth potential. It’s a lot easier to grow when you’re $300 million in market cap versus $3 trillion. The drawback to small-cap funds is they tend to be more volatile, but the extra bumps can be worth the reward over the long term.
TSMMX uses quantitative models based on financial and investment theories to select stocks from the Russell 2500 index, which holds the smallest companies in the Russell 3000 index.
Whatever quantitative alchemy the fund managers are using has been working for TSMMX: The fund has been in the top quartile of small blend funds in terms of performance over the past one-, three- and five-year periods. It also consistently outperforms the Morningstar US Small Cap Index. Plus, it’s well diversified with only 9% of the fund in the top 10 of its 357 holdings.
[READ: 7 Best Treasury ETFs to Buy Now]
Manning & Napier High Yield Bond W (MHYWX)
Investing is all about finding balance, such as the balance between risk and return, which MHYWX does well. Its portfolio includes 92 bonds, chosen to optimize long-term total return.
It’s a high-yield bond fund, meaning it invests primarily in noninvestment-grade debt. And yet, it still manages to be below-average risk relative to its category peers. At the same time, it provides among the highest returns — including a trailing 12-month yield of over 8.4% — all while charging only 0.11% in expenses. There’s also no minimum investment.
Dodge & Cox Income I (DODIX)
If you want balance with a bit less risk in your fixed-income portfolio, DODIX may be the fund for you. It’s a “top-notch core-plus offering” that’s “tough to beat,” according to Mara Dobrescu, a senior principal at Morningstar.
DODIX strives to generate high current income without sacrificing long-term capital preservation. It does this with a “highly selective, diversified and actively managed” portfolio that can form the core of your fixed-income holdings.
This leads to a fund with more than 1,400 holdings, two-thirds of which are AAA rated at the time of this writing. Although, it will venture farther down the credit rating scale and into noninvestment-grade debt. You’re still looking at average risk but high returns relative to its category, according to Morningstar.
Vanguard International Core Stock Fund Investor Shares (VWICX)
International exposure is key to a well-diversified portfolio. When the U.S. economy falls into a downturn, having investments based in other countries could buffer your portfolio. This is what VWICX aims to provide as a core international stock fund.
The portfolio includes both developed and emerging market exposure. Emerging markets are countries whose economies are still developing. This can make investments in these areas more volatile, but also potentially more lucrative as they tend to have greater growth potential than developed nations.
VWICX’s managers are bullish on Europe and emerging markets with nearly half and one-quarter of the portfolio based in such regions, respectively. The remaining 92-stock portfolio consists of the Pacific and North American countries, but nothing in the U.S.
Fidelity Pacific Basin (FPBFX)
While a broad international fund is always a good choice, if you want to place a bit more targeted bet, the Pacific Basin could be a great place to be. This region covers Australia, Hong Kong, Indonesia, Japan, South Korea, Malaysia, New Zealand, the People’s Republic of China, the Philippines, Singapore, Taiwan and Thailand.
FPBFX is the No. 1 Diversified Pacific/Asia mutual fund, according to U.S. News. Particularly intriguing about the strategy is that it includes exposure to China and Korea, two emerging markets that have been highlighted by analysts for having the most potential upside in the region.
What’s more: It comes with a 5.8% yield, providing a nice cherry to top off your international stock sundae.
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7 Best Mutual Funds to Buy Now originally appeared on usnews.com
Update 04/16/25: This story was previously published at an earlier date and has been updated with new information.
