The best mutual funds for your retirement.
Investing for retirement is the primary goal of most retail investors. But with the volatility of the stock markets, you may be concerned that your assets are not sufficiently funding your retirement lifestyle. Taking an active role in selecting the best retirement funds will help you build and protect your nest egg. Choosing the best 401 (k) mutual funds – balancing risk and expected returns while minimizing fees – can help you grow your money for retirement and last a long time. And whether you’re building wealth for tomorrow or investing as a retiree, these mutual funds can provide both capital appreciation and income. Here is a list of some of the best mutual funds for retirement.
Vanguard Target Retirement 2035 Fund (symbol: VTTHX)
Vanguard’s target retirement fund line each has a retirement date. The 2035 fund is therefore designed for investors who plan to retire in around 14 years, and there is a series of comparable offers with different expected retirement dates. These predefined retirement dates can be helpful. Investing in a fund designed with your retirement date in mind can help dampen your emotional reaction to short-term fluctuations in the stock and bond markets. VTTHX owns shares of the Vanguard Total Stock, Total International stock, Total Bond and Total International Bond index funds. This lifecycle retirement fund has a return of 1.48% and a low net expense ratio of 0.14%. The fund automatically adjusts holdings as you age, decreasing your exposure to equities, while increasing exposure to bonds as you approach retirement.
Vanguard Target Retirement Income Fund (VTINX)
Retirees and near-retirees should consider another low-fee Vanguard retirement income fund for their cash flow. VTINX invests in five Vanguard index funds to achieve an asset allocation of around 30% in stocks and 70% in bonds. The fund consists of national and international equity funds and three bond funds: total, international and inflation protected. The returns for this fund mirror those of the underlying indices, with average five- and 10-year returns of 6.7% and 6%, respectively, as of August 31. The fund significantly exceeded the 10-year average return for the retirement income fund category. by 5.12%. VTINX has an expense ratio of 0.12%. According to Vanguard, that’s 75% less than the average expense ratio of funds with similar holdings. A $ 10,000 investment in the fund 10 years ago would be worth approximately $ 17,900 at the end of August.
Vanguard Wellesley Income Fund Investor Shares (VWINX)
This balanced fund is perfect for income investors, offering exposure to high quality stocks and bonds. While balanced funds tend to be allocated more to stocks, this fund allocates around 38.6% to stocks and 60% to bonds. The rest is in short-term reserves. The fund holds a mix of over 1,200 bonds and over 60 stocks. VWX’s portfolio focuses on stocks that have historically paid above-average dividends or where dividends are expected to increase. Some of the top 10 holdings include JP Morgan Chase & Co. (JPM), Johnson & Johnson (JNJ), and Cisco Systems Inc. (CSCO). The current yield is 2.38% and the expense ratio is 0.23%. The fund’s five- and ten-year annual returns of 7.6% and 8%, respectively, exceeded their category averages.
Northern Trust Global Tactical Asset Allocation Fund (BBALX)
This Northern Trust “fund of funds” is suitable for investors interested in diversifying their retirement portfolio with an international mix of stocks, bonds and commodities. The fund’s strategy is to invest in funds that invest in companies located outside of the United States as represented in the MSCI EAFE and MSCI Emerging Markets indices, as well as other diversified foreign indices. BBALX goes beyond the typical 60% equity and 40% bond allocation with additional asset classes such as high yield and investment grade bonds, infrastructure, global real estate and resources natural. The greater diversification of the fund offers better protection against the underperformance of a particular asset class. As a fund of funds, BBALX invests in other types of funds rather than stocks and bonds directly. The five-year and ten-year average annual returns are 7.7% and 6.7%, respectively, outperforming the Morningstar category averages but behind the fund’s internal benchmark. The current fund yield is 1.77% and the net expense ratio is 0.56%.
Baird Aggregate Bond Fund (BAGIX)
Despite the low interest rate environment, retirees and those nearing retirement need to hold bonds to generate income and offset volatility in the stock market. An actively managed fund, BAGIX attempts to achieve an annual rate of return higher than that of the Bloomberg Barclays US Aggregate Bond Index. The fund is focused on risk control and investment discipline. BAGIX’s credit quality ranges from its holdings of leading US Treasuries to its allocation of approximately 23% BBB-rated bonds. The fund’s sector profile covers government, industrial and financial bonds. BAGIX displays a return of 2.03% for investor shares and will adapt to changes in interest rates. The management expense ratio is 0.3%.
Vanguard Balanced Index Fund Admiral Shares (VBIAX)
The champion of low-cost index funds does not disappoint with its net expense ratio of 0.07% and return of 1.43%. VBIAX adheres to a typical allocation of 60% equities and 40% bonds and aligns with major stock and bond indices. The bond part is like a medium-term bond fund. The fund is diversified across all equity sectors, with its primary allocations in consumer discretionary, healthcare and industrials. The number of positions exceeds 12,000, including more than 3,600 stocks, with exposure geared towards large-cap stocks such as Apple Inc. (AAPL), Microsoft Corp. (MSFT) and Alphabet Inc. (GOOG, GOOGL). The fund is well diversified in terms of investment sectors, bond issuers and credit qualities.
Pimco Income Fund (PIMIX)
The last best retirement fund on this list falls into the fixed income category. PIMIX offers income with less risk than a fully equity portfolio. The fund’s objective is to maximize current income, with capital growth as a secondary objective. The fund actively manages bonds of varying maturities and credit qualities. In addition, PIMIX uses derivative investment strategies to increase income. The fund holds fixed income securities from around the world and enjoys the advantages of growing bond sectors. PIMIX tactically adjusts holdings to maximize returns. As of September 7, the yield was 4.1%. The fund has an expense ratio of 0.5%. PIMIX enjoys a five-year average annualized return of 5.5% and an average return of 7.1% over the past decade.
The best funds for retirement:
– Vanguard 2035 Target Retirement Fund (VTTHX)
– Vanguard Target Retirement Income Fund (VTINX)
– Investor shares in Vanguard Wellesley Income Fund (VWINX)
– Northern Global Tactical Asset Allocation Fund (BBALX)
– Baird Aggregate Bond Fund (BAGIX)
– Vanguard Balanced Index Fund Admiral Shares (VBIAX)
– Pimco Income Fund (PIMIX)