Mutual Funds

The 25 Best Mutual Funds

We searched thousands of stock and bond funds for those that offer the best returns, managers who employ sensible investment methods and that take their responsibilities to shareholders seriously.

By Steven Goldberg, Contributing Columnist, Kiplinger.com

May 2005

Clarice Grabau and husband James have decades to go before they stop working. Nonetheless, the Northfield, Minn., couple are saving to the max for the day they do. Kay Rodriguez and her husband, Ed Sider, of Seattle, are already retired and have entirely different investment goals. So does single mom Sandi Brown, who lives in the Chicago suburb of Elgin. She's building a college fund for her 14-year-old daughter.

What they have in common is a desire to build wealth through mutual funds. But for all of us, it comes down to a simple question: Which funds? We've done the work for you. It's time you met the Kiplinger 25.

One element that sets these funds apart from the pack is that they are investor-friendly. None levy front-end sales fees, or loads. Expenses are generally low to moderate. And most are accessible with modest minimum initial investments of $2,500 or less.

Picking good funds starts with a look at the numbers. Obviously, you want funds with solid long-term records. But it's not enough to simply pick the best performers over, say, the past five or ten years. A fund's returns should be commensurate with the risks it takes. Consistently above-average performers are better than those that soar one year and stink the next. And because people run funds, it's important to get to know them. We look for managers who employ sensible investment methods that they stick with irrespective of market fads. It's important, too, to invest with fund companies that take their responsibilities to shareholders seriously. None of the sponsors of the Kiplinger 25 were implicated during the recent fund-trading scandals.

Just as important as identifying great funds is assembling them into a diversified portfolio. The three portfolios we've assembled are designed for people with different goals, lengths of time to invest and tolerances for risk. If you have many years before you'll need your money, like the Grabaus, you should invest entirely in stock funds. But if you're already living off your investments, as Rodriguez and Sider are, you'll want to build a comfortable cushion in bond funds.

For your convenience, we divide the Kiplinger 25 among U.S. stock funds, foreign-stock funds and bond funds.

1 |
• 2
|
• 3
|
• 4
|
• 5
|
• 6
|
• 7
• NEXT >

• Print
• Comments
• Email
• RSS