The Ten Best Mutual Funds
The 10 best mutual funds will be different for every investor. Investment choices are dependent upon several factors, such as the investor's age, goal, portfolio size and tolerance for risk. Because of these factors, what defines the 10 best for one investor will not necessarily define the 10 best for another investor.
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Large-Cap Funds
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Large capitalization funds, also knows as large-cap funds, invest in companies that have a market value, number of outstanding shares times the share price, of over $8 billion. In general, investments in large-cap funds have a low level of risk. According to CNNMoney, the four actively managed large-cap funds with the best five-year rate of return, as of March 15, 2010, are FMI Large Cap, American Funds AMCAP A, Jensen J and T.Rowe Price Blue Chip Growth.
Mid-Cap Funds
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Also known as mid-caps, middle capitalization funds invest in companies with a market capitalization between about $1 billion and $8 billion. The investments in companies at the lower end of the range add faster growth potential but also add some risk. According to CNNMoney, the two actively managed mid-cap funds with the best five-year rate of return, as of March 15, 2010, are Fairholme and PRIMECAP Odyssey Aggressive Growth.
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Small-Cap Funds
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Small-cap funds invest in companies with a market capitalization of less than $1 billion. These funds have the highest potential for growth but also the most risk of the three types of capitalization funds. According to CNNMoney, the three actively managed small-cap funds with the best five-year rate of return, as of March 15, 2010, are Royce Pennsylvania Mutual Investment, Royce Value Plus Service and T.Rowe Price New Horizons.
Additional Fund Types
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There is the possibility for an infinite number of fund types. In addition to large-, mid- and small-cap funds, mutual funds can invest in a combination, making them a mid- to large-cap fund or a small- to mid-cap fund. Within each capitalization, there are funds that invest in specific sectors, such as health care or energy. For instance, T. Rowe Price New Era invests in natural resources and T. Rowe Price Emerging Markets Stock invests in international companies in new markets. Funds can specialize in the U.S. market, the international market or a combination, called the global market. A well-balanced portfolio will be invested in several of these sectors and markets, based upon the age, risk tolerance and portfolio size of the investor.
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