The Best Performing Mutual Funds in 2020

When considering mutual funds in a time like this, there are key requirements to look out for, such as low expenses, diversification, balance of assets, and defensive sectors. The year, 2020, has so far been a volatile year for financial markets. The stock market, for the first time in 11 years has slid into bear territory and many investors have backed out from the market. In spite of the volatility rocking the market, some investors like Michael Burry believe that now is the best time to invest. In such volatile times, long-term investors take advantage of the lower prices while maintaining a long-term investment view.

There is a possibility of a recession to occur in 2020 and last through 2021. As a result of this, investors must look to long-term investment strategies to get the best out of their investments. By having this in view, investors will be able to identify the best mutual funds to buy and hold over a long period of time—ten to twenty years. One of the best mutual funds investment strategies to apply in the current economic decline is the ‘buy and hold’ strategy which would allow investors to invest in mutual funds at a lower market price and hold over a long period of time to reap good returns.

In this article, we have been able to select top mutual funds to consider in 2020 based on the following requirements:

  • Overall performance: this focuses on both the short term and long term performance of the mutual funds. Their ability to remain stable in current volatile markets and outdo the markets over a long period of time.

  • Low expenses: The current market situation has caused market prices to fall below par. Investors considering mutual funds to invest in shouldn’t only look out for those with lower prices but those with lower expenses as well. This includes low or no commissions or sales charges. It is also a way for investors to make higher returns.

  • Strong sectors: The coronavirus crisis has affected sectors differently and there is a possibility that these sectors would recover at different paces. It is a key factor to consider sectors that are more likely to bounce back after an economic decline and perform well in the long run.

  • Diversification: by including other investments like stocks or bonds in a portfolio the investor would be able to offset any future risks that may arise in the future.

  • Dependable banks: mutual funds that come from societally recognized and accepted good banks that dependable.

Note: these requirements are not based on mutual funds that are currently performing at this time, rather mutual funds that would perform over a long period of time. Investors must, therefore, have their eyes out to consider both short term and long term possible returns. There is also a possibility of the economy not stabilizing immediately, therefore, many investors may have to opt for long-term (a decade or more) total returns.

Fidelity Select Software & IT Services Fund (FSCSX)

  • Minimum investment: $0

  • Expense ratio: 0.72%

  • Yield: 0.20%

  • 1-year return: 36.38%

  • 3-year return: 25.97%

  • 5-year return: 22.23%

  • 10-year return: 20.46%

  • Lifetime return: 16.37%

Note: This fund focuses its investments on large-growth tech and software companies some of which include Google and Microsoft. It is a tech-based fund, therefore, about 75% of its investments are in tech and software companies. Since its inception, it has outlasted minor market declines like the 1987 stock market crash and the Tech Bubble Burst of early 2000s.

Fidelity Magellan (FMAGX)

  • Minimum investment: $0

  • Expense ratio: 0.67%

  • Yield: 0.42%

  • 1-year return: 24.22%

  • 3-year return: 16.30%

  • 5-year return: 16.30%

  • 10-year return: 12.82%

  • Lifetime return: 0.42%

Note: This mutual fund has its focus on large-growth companies. Since its inception it has made great annual returns with an average of 29.2%

Hussman Strategic Total Return Fund (HSTRX)

  • Minimum investment: $1,000

  • Expense ratio: 0.74%

  • Yield: 0.75%

  • 1-year return: 10.43%

  • 3-year return: 4.51%

  • 5-year return: 3.59%

  • 10-year return: 2.71%

Note: This mutual fund also doubles as a hedge fund. It is a good mutual fund to buy and hold till the economy stabilizes again, however, it often does not lead the market on the upside. The fund manager, John Hussman is known for predicting the 2008 market plunge, and the creation of the balance of assets to average returns that beat the inflation at the same time minimizing losses during corrections.

T. Rowe Price New Horizons Fund (PRNHX)

  • Minimum investment: $2,500

  • Expense ratio: 0.77%

  • Yield: 0%

  • 1-year return: 37.71%

  • 3-year return: 23.51%

  • 5-year return: 16.24%

  • 10-year return: 18.80%

  • Lifetime return: 11.89%

Note: This fund has a working strategy that focuses on investing in small and mid-cap growth companies. Companies that may be small at a particular time but have great potentials of quick growth. It also includes investing in private companies that are yet to go public.

Vanguard Wellington Fund Investor Shares (VWELX)

  • Minimum investment: $3,000

  • Expense ratio: 0.25%

  • Yield: 2.48%

  • 1-year return: 22.5%

  • 3-year return: 10.7%

  • 5-year return: 10.7%

  • 10-year return: 9.90%

  • Lifetime return: 8.33%

Note: Considering the fact that this mutual fund has outlasted all three US economic decline is a good sign that it could also outlast the current economic decline. Since its inception in 1929, it has maintained a moderate balance. It also has multiple dividend-paying stocks and quality bonds.

Vanguard Health Care Fund Investor Shares (VGHCX)

  • Minimum investment: $3,000

  • Expense ratio: 0.28%

  • Yield: 1.10%

  • 1-year return: 22.93%

  • 3-year return: 14.15%

  • 5-year return: 8.80%

  • 10-year return: 14.35%

  • Lifetime return: 1.10%

Note: In the health care sector this could just be a good mutual fund to invest in considering the fact that people would always require health care services and medications even after the current coronavirus and economic crises. As a whole, the health care sector covers hospitals, medical apparatus, pharmaceuticals, and other health care service providers. The Vanguard Health Care Fund Investor Shares (VGHCX) is a mutual fund that offers both domestic and international investment opportunities. Since its inception in 1984, it has averagely returned 14.35% in annual gains.

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