Best Mutual Funds to Buy for 2026 and Beyond
The best mutual funds capitalize on new trends that emerge year to year, all while offering low costs and solid management.
The best mutual funds to buy operate on long-term optimism. At the same time, they stop well shy of implying that everything that trades will go up and to the right in a straight line higher.
Still, stock-market pundits entered 2026 with expectations for more double-digit gains after the S&P 500 finished 2025 with a total return in the high teens that easily surpassed its long-term annual average.
The destination was right, but the journey was much different than expected amid a flurry of tariffs, rapid policy shifts and other issues driving stocks within an inch of a bear market before a violent rebound put stocks back into flight.
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Price action in 2026 has looked a lot like 2025 so far, including a steep spring sell-off triggered by big policy moves in Washington, D.C.
Lesson learned: As long as you look at market outlooks as a way to spot potential opportunities, rather than a laser-precise roadmap of every step to come, you should do all right.
What are mutual funds?
A mutual fund is a type of investment fund, a pool of money from several investors an investment firm uses to buy stocks, bonds and/or other assets. Exchange-traded funds (ETFs) and closed-end funds (CEFs) are other types of investment funds.
Mutual funds are largely defined by how they operate.
Actively managed funds are run by one or more investment managers, who research, buy, monitor and sell investments within the fund. While they typically operate under some general guidelines — a blue-chip fund manager likely won't invest in microcap stocks — they often have broad leeway to invest as they see fit.
Index funds, however, invest automatically based on a rules-based index, like the S&P 500. For instance, an index mutual fund might track an index of large-cap tech stocks. As stocks enter the index, the fund is required to buy them in a manner that matches their weight in the index — and as they leave, the fund is required to sell them under the same parameters.
Because index funds don't require human managers (who in turn require salaries), they're often able to charge much lower fund fees. And broadly speaking, index funds on average tend to outperform professional managers.
On the flip side, index funds are constrained — they must buy what the index says they must buy, even if it might make poor investment sense. They also can't, say, exploit a quick period of extremely cheap valuations in a stock — a human manager can be much more agile because they're not being held back.
Best mutual funds to buy
Let's look at some of the best mutual funds to buy for 2026 and beyond.
These funds have been selected for their ability to capitalize on emerging trends, as well as other vital considerations, such as fees, investment strategy, management track record and more.
Data is as of May 20, 2026. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds. SEC yields reflect the interest earned after deducting fund expenses for the most recent 30-day period and are a standard measure for bond and preferred-stock funds.
Fidelity 500 Index Fund
- Fund category: Large blend
- Assets under management: $791.7 billion
- Yield: 1.1%
- Expense ratio: 0.015%, or $1.50 annually for every $10,000 invested
"The U.S. is set to remain the world's growth engine, driven by a resilient economy and an AI-driven supercycle that is fueling record capex and rapid earnings expansion."
That's what J.P.Morgan's Dubravko Lakos-Bujas had to say about America heading into 2026, and he's hardly alone. Numerous research firms provided bullish outlooks for U.S. GDP growth, reflected in general optimism about where the S&P 500 will end up by New Year's 2027.
Specifically, roughly a dozen research firms' price targets for the index averaged out to about 7,600. As of May 20, the S&P 500 had already reached 7,433. Bullish firms such as Yardeni Research now see year-end levels of 8,250, with ISI Evercore noting a 30% probability the index gets to 9,000.
As boring as it might be to lead with an S&P 500 index fund on our list of the best mutual funds to invest in … well, we're going to.
The Fidelity 500 Index Fund (FXAIX) is one of the most cost-effective ways to buy the S&P 500. Fidelity charges a skinflint 1.5 basis points (a basis point is one one-hundredth of a percentage point) that undercuts even the cheapest S&P 500 ETF.
Meanwhile, neither FXAIX nor most other Fidelity mutual funds require a minimum initial investment, so even investors with little cash to start with can dig in right away.
FXAIX is market cap-weighted, which means the fund allocates the most assets to the largest companies, which means that companies such as Nvidia (NVDA) and Apple (AAPL) have an outsize effect on performance.
While there are other actively managed Fidelity funds that can take advantage of continued growth in the U.S. economy, few funds in the large-cap space can do better than the S&P 500 in the long-term, especially once you include fees, which are virtually always cheaper for index funds. Why roll against the odds?
Learn more about FXAIX at the Fidelity provider site.
T. Rowe Price Financial Services Fund
- Fund category: Financial
- Assets under management: $1.8 billion
- Yield: 0.9%
- Expense ratio: 0.86%
Financial firms such as banks and insurers were among the most popular picks heading into 2026 from a sector standpoint.
"Several tailwinds are converging for financials and are not yet priced in," Deutsche Bank said in its 2026 look-ahead. Among them, according to independent research firm CFRA's chief investment strategist Sam Stovall, are "lower rates continuing through 2026; improving credit quality; expected M&A turnaround; declining credit spreads."
Not all those tailwinds have developed as forecast, and financial stocks have struggled year to date amid rising inflation and questions about the impact of AI on service industries. Still, generally speaking, financials are a big part of the economy, and it's hard to have a sustained bull market without their participation.
T. Rowe Price Financial Services Fund (PRISX) is one of the best-rated mutual funds to invest in this sector, boasting a Bronze Medalist rating (forward-looking) and a five-star Morningstar rating (based on performance).
Co-managers Matt Snowling and Greg Locraft have built a 100-stock-plus portfolio of financial stocks. That's almost exclusively made up of companies that are within the sector, such as Bank of America (BAC), Visa (V) and Chubb (CB), but the fund does have a carve-out for companies outside the sector (think providers of financial software) as long as they derive more than half of sales from doing business within financial services.
PRISX has been extremely productive over its history, including trailing 10- and 15-year average annual returns that are within the top 10% of its Morningstar category.
T. Rowe Price Financial Services requires at least $2,500 for an initial investment.
Learn more about PRISX at the T. Rowe Price provider site.
Dodge & Cox Emerging Markets Stock Fund
- Fund category: Diversified emerging markets
- Assets under management: $1.1 billion
- Yield: 1.8%
- Expense ratio: 0.70%
One of the more interesting stories of 2025 was the resurgence of international stocks, which commonly underperform their U.S. counterparts but excelled last year amid a weakening U.S. dollar and other drivers.
That goes not just for more developed markets, but riskier emerging markets, as well. The latter's good fortunes have continued into 2026.
"They remain attractively valued and under-owned," JPMorgan said in its 2026 year-ahead outlook. "We believe the combination of improving macro momentum, rising domestic liquidity and a shift in households' asset allocation toward equities should support a sustained recovery."
Dodge & Cox Emerging Markets Stock Fund (DODEX) is a roughly 300-holding portfolio of companies predominantly domiciled in emerging or "frontier" countries that the fund's five-member investment committee views as undervalued despite having a "favorable outlook" for long-term growth.
While it allocates about a quarter of assets to mid- and small-cap stocks, the lion's share of weight goes to mega-cap international firms such as Taiwan Semiconductor (TSM) and Alibaba Group (BABA).
It's a much larger basket of holdings than is typically found in a Dodge & Cox vehicle, but the young fund's strategy has been effective since its May 2021 launch; its 19.3% trailing three-year average annual return is more than 4 percentage points better than the category average and benchmark index.
"Dodge & Cox Emerging Markets Stock is proving the skeptics wrong," Morningstar Associate Director Tony Thomas says about the fund's Silver Medalist rating. "A modest tilt toward value stocks has helped, but it's also found winners benefiting from strong growth, such as Taiwan Semiconductor Manufacturing — the portfolio's top holding since mid-2023."
DODEX requires a $2,500 minimum investment.
Learn more about DODEX at the Dodge & Cox provider site.
Vanguard Global Minimum Volatility Fund Investor Shares
- Fund category: Large blend
- Assets under management: $2.0 billion
- Yield: 2.2%
- Expense ratio: 0.21%
CFRA's 2026 price target of 7,400 was among the more conservative estimates for the S&P 500. It suggested the index would only deliver mid- to high-single-digit gains in the year to come.
"Why so cautious?" Stovall says. "Still-high valuations, an elevated Buffett Indicator, a softening jobs market, and midterm elections present formidable headwinds."
Per the former, at the end of Q1, the S&P 500's market value was 219% of U.S. nominal GDP. "Historically, breaching 100% issued a cautionary signal, while eclipsing 120% raised a red flag," Stovall noted in November.
As for the latter, Stovall cited data since 1946 that shows the intra-year drawdown for midterm election years is 18%, which was the largest of all four years in the presidential cycle.
"The S&P 500 also experienced the weakest average annual price gain (3.8%) and rose in price only 55% of the time," he added.
Vanguard has plenty of funds to help hedge volatility, but the Vanguard Global Minimum Volatility Fund Investor Shares (VMVFX) is one of our favorite ways to approach it — even if it's not necessarily the purest way to go about it.
As the fund's name might indicate, this is a "global" (read: U.S. and international) fund, though it's split roughly 60/40 between domestic and international stocks. Manager Scott Rodemer holds more than 200 stocks of all shapes and sizes; large-cap stocks (70%) lead, but mid- (20%) and small-cap stocks (10%) are well-represented.
Rodemer isn't free-wheeling; he oversees a rules-based strategy that revolves around the FTSE Global All Cap Hedged Index. While he looks at each stock's own volatility, he also examines each one's role as it pertains to the broader portfolio's overall volatility — in other words, shades of both low- and minimum-volatility strategies.
As with other Vanguard funds, your initial investment in VMVFX will need to be at least $3,000.
Learn more about VMVFX at the Vanguard provider site.
T. Rowe Price High Yield Fund
- Fund category: Large blend
- Assets under management: $6.4 billion
- SEC yield: 5.9%
- Expense ratio: 0.70%*
Investors who want to offload their debt exposure to bond funds might do well to rely on actively managed funds whose leaders can adjust to shifts in the credit markets. That's generally true, though doubly so in times when the environment for bonds isn't exactly concrete.
One area of debt that BNP Paribas favored in its 2026 credit outlook is high-yield debt, aka noninvestment-grade debt, aka junk.
"The credit market, like the economy, is K-shaped and the lower half isn't experiencing ultra-fast growth, doesn't have aggressive capex or bond issuance plans and is deleveraging. Until that changes, the cycle can run longer, and returns stay positive," BNP Paribas' analysts said.
"Most things that are good about credit are in high yield: Spreads are decompressed, there's no supply problem, and the asset class typically outperforms as the cycle matures," they concluded.
T. Rowe Price High Yield Fund (PRHYX) is one of the bigger and better names in the high-yield space. Fund manager Rodney Rayburn invests predominately in U.S. corporate junk (90%), though the 430-bond portfolio also provides a little exposure to international corporate debt, U.S. convertible debt and other below-investment-grade securities.
PRHYX allocates about 45% of assets to single-B bonds (BNP Paribas' preferred rating in the space right now), another 33% in BB, and most of the rest in below-B debt.
Mike Della Vedova, who helped make decisions in PRHYX, has left the firm. Sole responsibility for the strategy is with Rayburn, but Morningstar isn't concerned.
"While Della Vedova's expertise will be missed, we believe Rayburn is well-equipped to continue leading the strategy. He has been involved with the strategy since 2019 and has established a solid track record," Senior Analyst Elbie Louw wrote.
PRHYX requires a $2,500 minimum investment to get started.
* 0.80% expense ratio is reduced by 10 basis points until at least July 31, 2027.
Learn more about PRHYX at the T. Rowe Price provider site.
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