• Basic Membership Access to Journal, Shadow Stock portfolio & monthly updates for stock screens
  • A+ Investor Full access to AAII.com, Journal, and a power data suite for investment ideas
  • AAII Platinum Full access to all of AAII's model portfolios and premium services at a significant discount
  • Dividend Investing Newsletter and model portfolio that focuses on dividend growth
  • AAII Growth Investing Find secular growth stocks poised for outperformance regardless of macroeconomic conditions.
  • Retirement Investing Discover trusted strategies for every stage of retirement. Get actionable insights and resources for smart retirement planning.
  • Sentiment Investing A research-driven newsletter with 10+ signals decoding sentiment across retail and institutional behavior.
  • Stock Superstars Report Get stock ideas inspired by the market's leading professionals
  • VMQ Stocks For the value investor looking to harness academic research in an actively managed portfolio
  • Bits and Bips Newsletter delivering insights on linking traditional finance, macro trends and cryptocurrency opportunities to help investors build stronger, more diversified portfolios.
All premium products come with free basic membership.
Explore All Membership Options
Join Now
Expand to Read More

Investing in Mutual Funds

A mutual fund is a financial asset that comprises money collected from many investors to invest in securities such as bonds, stocks and money markets. Professional money managers run mutual funds and decide how its funds will be invested. Those investments align with objectives stated in the mutual fund’s prospectus.

Individuals invest in mutual funds through existing investment accounts, directly from fund managers or via online brokerages. Often, employer-sponsored retirement accounts, such as a 401(k), invest in mutual funds. Investors can also buy directly from the fund manager, such as Vanguard or BlackRock. This path, however, may have limited choices. For the most flexibility when investing in mutual funds, individuals should leverage brokerages through which they can look up and buy shares of selected mutual funds.

Investors need to select the right mutual fund to maximize returns within risk toleration. Here, a few considerations arise: fund fees (the expense ratio), transaction fees and fund strategy. The expense ratio is an annual fee paid to the mutual fund’s manager. Expressed in percentage terms, it’s the ratio of your investment that goes toward the fund’s expenses rather than productive application. For example, a 1% expense ratio on a $10,000 investment amounts to $100 in fees every year.

Transaction fees are the amount billed to buy or sell mutual fund shares. These can range from $0 per transaction up to $20 per trade depending on the selected fund. Online brokers typically have no transaction fees for their own mutual funds but may well charge for investments in others. Be sure to check transaction fees before purchasing as they can eat into returns with active buying and selling.

The last, and most important, consideration when selecting the right mutual fund is its strategy. Mutual funds generally have an investment thesis that guides asset class allocation. There are four broad types of mutual funds: equity, fixed-income, money market and hybrid.

Equity, or growth, funds (including index funds) focus on capital appreciation and invest primarily in individual stocks. They may further refine their prospective to focus on growth or value stocks or specific sectors, believing they will outperform or provide investors with portfolio diversification. Index funds use pooled assets to buy shares that match or track a particular market index, such as the S&P 500 index. As with a typical asset allocation strategy, equity funds are generally better for investors with a long time horizon or high tolerance for risk.

Bond mutual funds invest in fixed-income securities. This typically includes government and corporate debt. The inherent stability in such debt lowers the potential for growth while providing predictable returns paid back to investors in fixed amounts. Investors nearing retirement often opt for such funds to protect their nest egg from market volatility.

Similarly, money-market mutual funds apply a fixed-income strategy by investing in high-quality, short-term debt from governments, banks or other corporations. Because the debt is so short-term, these are considered the safest investments. They offer the lowest returns.

Hybrid, or balanced, funds, as the name implies, combine equities with fixed-income investments in a specified asset ratio. Target-date funds, like those offered by Vanguard, take a hybrid approach that dynamically alters the asset allocation between equities and bonds based on time remaining to the identified date, such as retirement.

Various strategies entail more active or passive management. Generally, actively managed funds—those with high asset turnover, typically equity funds—have higher expense fees than passively managed mutual funds. Newly popular index funds, which provide investors stock exposure and diversification, have lower expense ratios than other equity funds because they remove elements of stock picking and have reduced portfolio turnover.

With each fund type, investors make money from a mutual fund through income generation, capital gains or net asset value appreciation. Income comes through dividend payments from equity or interest payments from bonds. Capital gains occur when a mutual fund sells a security that has gone up in price and then distributes that those gains to investors. Net asset value appreciation happens when the value of the fund increases, raising the price to purchase its shares. Of course, for both capital gains and net asset value, the opposite can occur: Funds can sell securities at a loss and see their own share prices decrease.

Mutual Fund Investing Strategies

Investors often wonder how many mutual funds they should invest in. AAII suggests no more than eight. That number allows for adequate diversification among asset classes and sufficient exposure to stocks and fixed-income securities. As with investing in ETFs or individual stocks, investors need to diversify their portfolio. That means selecting mutual funds that invest in large-, mid- and small-cap stocks, foreign equities and bonds of various durations.

Here’s one scenario AAII suggests for how investors could diversify a mutual fund portfolio (select one of each):

As mentioned, equity funds provide the highest rates of return. Performance within various equity classes varies year to year and with economic conditions. Index funds will nearly exactly match the performance of their modeled indexes. International and emerging stocks give exposure to foreign companies and developing nations, both of which—especially the latter—have the potential for dramatic growth in the right economic conditions.

Investing in ETFs

Many investors consider ETFs as an alternative to mutual funds because they may have similar strategies and returns but with lower expense ratios. Bought through brokerages, ETFs can be a good investment for those with a passive strategy. Similar to investing in mutual funds, selecting a few ETFs can provide needed diversification and proper asset allocation for risk tolerance and time horizon.

Investors should own a number of ETFs commensurate with their goals. Level I ETF investing, a simple approach that covers substantial investment ground, involves owning three ETFs. These ETFs would cover the broad U.S. market (this includes stocks of all market capitalization), international stocks and an intermediate-term government bond ETF.

Level II ETF investing still applies an index fund approach but ratchets up complexity for more granular control on asset allocation and diversification. There, investors may own up to 10 ETFs. These would cover the broader market, large-cap stocks, extended markets, mid-cap stocks, small-cap stocks, micro-cap stocks, the broader international stock market, emerging markets, intermediate-term U.S. government bonds and short- or long-term U.S. government bonds.

AAII Tools Aid in Fund Selection

Overall, mutual funds and ETFs provide valuable avenues for investors who want easy exposure to various sectors or asset classes and don’t want to pick individual stocks. You can use AAII’s proprietary tools to find the best mutual funds and ETFs for your investment goals. We offer specialized fund screeners and performance benchmarks so you can find the top mutual funds. All of these tools, and many more to help you become an experienced investor, can be yours for just $2 with a no-risk trial. Click below to get started!

Commentary ● November 1

Crypto and Long-Term Bonds Boosted by Third-Quarter Rally

By AAII Staff

The top 25 and bottom 25 exchange-traded funds (ETFs) and mutual funds for the third quarter of 2026.

Continue Reading

My Mutual Funds
My Mutual Funds (0)
First Cut Screens
First Cut Screens (32)
Fund Screener
Fund Screener
Fund Openings and Closings
Fund Openings/Closings (28)
Consistent Performers
Consistent Performers (1,467)
Top and Bottom Funds
Top & Bottom Funds
Commentary and Reports
Commentary & Reports
insights
Fund Insights
COMPARE MUTUAL FUNDS:
Guru Screens
Featured Fund First Cut ● See All Fund First Cuts

Socially Responsible Equity Stock Funds

No-load mutual funds that use a socially-responsible approach to identifying stocks. Passing funds are open to new investors and have at least one year of performance. Funds with very high expense ratios for their categories are excluded.

Passing Funds Ranked By 1-Month Ret

FUND NAME TICKER 1-MONTH RET TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
American Century Large Cap Equity Inv AFDIX (1.2%) D 1.07 1.01 B 0.79% C Large Blend
Artisan Sustainable Emerging Mkts Inv ARTZX (2.7%) F 1.32 0.99 C 1.15% C Diversified Emerging Mkts
Brown Advisory Sustainable Growth Inv BIAWX (1%) F 1.38 0.98 C 0.75% D Large Growth
Brown Advisory Sustainable Sml-Cp Cr Inv BIAYX (4%) B 1.40 0.93 F 1.09% C Small Blend
Brown Advisory Sustainable Val Inv BISVX (5.4%) F 1.09 1.10 A 0.86% C Large Value

See All 28 Funds

(Data as of 9/30/2026)

Top Bottom Funds

Top/Bottom Performing Funds

The best and worst performing mutual funds in key categories, updated monthly.

TOP FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
True Rock Fund TRUEX 30.5% A 3.12 2.20 F 1.50% F Large Growth
Auer Growth AUERX 20.7% A 1.40 0.94 B 2.05% F Small Value
Alger Focus Equity I ALGRX 19.6% A 1.77 1.25 F 0.95% C Large Growth
Alger Focus Equity A ALAFX 19.6% A 1.77 1.25 F 0.99% D Large Growth
Alger Focus Equity C ALCFX 18.7% A 1.77 1.25 F 1.74% F Large Growth

See Top 100 Funds

BOTTOM FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
Virtus KAR Small-Cap Growth A PSGAX (8%) F 1.58 0.95 B 1.39% F Small Growth
Virtus KAR Small-Cap Growth R6 VRSGX (7.7%) F 1.58 0.95 B 1.01% D Small Growth
Alger Weatherbie Specialized Growth C ALMCX (7.2%) F 1.89 1.13 F 2.08% F Small Growth
Morgan Stanley Inst Inception C MSCOX (6.7%) F 2.54 1.52 F 2.10% F Small Growth
Jacob Small Cap Growth Investor JSCGX (6.7%) F 2.50 1.50 F 3.22% F Small Growth

See Bottom 100 Funds

(Data as of 9/30/2026)


TOP FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
Nomura Emerging Markets R6 DEMZX 27.5% A 3.28 2.46 F 1.06% D Diversified Emerging Mkts
Nomura Emerging Markets Instl DEMIX 27.4% A 3.28 2.46 F 1.15% D Diversified Emerging Mkts
Nomura Emerging Markets A DEMAX 27.1% A 3.28 2.46 F 1.40% F Diversified Emerging Mkts
Nomura Emerging Markets R DEMRX 26.8% A 3.28 2.46 F 1.65% F Diversified Emerging Mkts
Nomura Emerging Markets C DEMCX 26.1% A 3.27 2.46 F 2.15% F Diversified Emerging Mkts

See Top 100 Funds

BOTTOM FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
Morgan Stanley Global Endurance C MSJCX (7.9%) F 1.69 1.24 F 2.10% F Global Small/Mid Stock
Columbia Greater China A NGCAX (7.9%) F 1.68 0.94 B 1.49% F Greater China Region
WCM China Quality Growth Investor WCQGX (7.9%) F 2.10 1.17 F 1.52% F Greater China Region
Columbia Greater China Inst LNGZX (7.7%) F 1.68 0.94 B 1.24% D Greater China Region
Morgan Stanley Global Endurance A MSJAX (7.3%) F 1.69 1.24 F 1.35% D Global Small/Mid Stock

See Bottom 100 Funds

(Data as of 9/30/2026)


TOP FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
Fidelity Advisor Semiconductors Z FIKGX 38.2% A 2.84 1.39 F 0.54% B Technology
Fidelity Advisor Semiconductors I FELIX 38.0% A 2.84 1.39 F 0.66% B Technology
Fidelity Select Semiconductors FSELX 37.8% A 2.85 1.40 F 0.60% B Technology
Fidelity Advisor Semiconductors A FELAX 37.7% A 2.84 1.39 F 0.91% C Technology
Fidelity Advisor Semiconductors M FELTX 37.4% A 2.84 1.39 F 1.16% D Technology

See Top 100 Funds

BOTTOM FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
Firsthand Technology Opportunities TEFQX (17.3%) F 2.64 1.30 F 1.85% F Technology
Jacob Internet Inv JAMFX (10.2%) F 2.52 1.24 F 2.38% F Technology
Emerald Bkg & Finac Evolution - C HSSCX (8.5%) F 2.00 1.31 F 2.46% F Financial
Emerald Bkg & Finac Evolution - Inv FFBFX (7.9%) F 2.00 1.31 F 1.78% F Financial
Emerald Bkg & Finac Evolution - A HSSAX (7.9%) F 2.00 1.31 F 1.84% F Financial

See Bottom 100 Funds

(Data as of 9/30/2026)


TOP FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
BlackRock Allc Trgt IntrR Hedge BATPX 9.4% A 0.56 1.31 F 0.14% A Miscellaneous Fixed Income
Eaton Vance Glbl Macro Abs Ret Advtg A EGRAX 9.3% A 0.36 1.21 F 2.47% F Nontraditional Bond
Eaton Vance Glbl Macro Abs Ret Advtg R EGRRX 9.0% A 0.36 1.20 F 2.72% F Nontraditional Bond
Eaton Vance Emerging Markets Dbt Opps A EADOX 8.8% A 0.36 0.70 A 1.06% D Emerging Markets Bond
Eaton Vance Glbl Macro Abs Ret Advtg C EGRCX 8.5% A 0.36 1.20 F 3.22% F Nontraditional Bond

See Top 100 Funds

BOTTOM FUNDS

FUND NAME TICKER 5-YR
ANNUAL
RETURN		 TOTAL
RISK
INDEX		 CATEGORY
RISK
INDEX		 EXPENSE
RATIO		 CATEGORY
DFA LTIP Institutional DRXIX (11.9%) F 1.19 3.10 F 0.12% A Inflation-Protected Bond
Wasatch-Hoisington US Treasury WHOSX (8.6%) F 1.20 1.14 F 0.73% B Long Government
Fidelity SAI Long-Term Treasury Bd Idx FBLTX (8.4%) F 1.11 1.05 D 0.03% A Long Government
PIMCO Long-Term US Government C PFGCX (8%) F 1.04 0.99 C 4.83% F Long Government
T. Rowe Price US Trs LongTerm Idx PRULX (7.8%) F 1.03 0.98 C 0.29% A Long Government

See Bottom 100 Funds

(Data as of 9/30/2026)


Consistent Performers

Consistent Performers

A list of mutual funds that have exceeded or fallen short of their category over the last 3-, 5-, and 10-year periods, updated monthly.

FUND NAME TICKER ANNUAL RETURN CATEGORY
RISK
INDEX		 CATEGORY
3-YR 5-YR 10-YR
Horizon Active Asset Allocation Investor AAANX 18.1% A 9.3% A 10.5% A 1.22 F Tactical Allocation
Alger Large Cap Growth I-2 AAGOX 36.2% A 13.2% A 18.7% A 1.25 F Large Growth
American Funds American Balanced A ABALX 17.0% A 9.2% A 9.8% A 1.02 D Moderate Allocation
American High-Income Municipal Bond F-1 ABHFX 5.0% A 0.6% A 2.5% A 0.96 B High Yield Muni
Alger Balanced I-2 ABLOX 17.7% A 11.0% A 10.9% A 0.98 C Moderate Allocation

See All 1,467 Funds

(Data as of 9/30/2026)


FUND NAME TICKER ANNUAL RETURN CATEGORY
RISK
INDEX		 CATEGORY
3-YR 5-YR 10-YR
DWS RREEF Real Assets A AAAAX 10.5% F 4.3% F 6.4% F 1.08 F Global Moderately Aggressive Allocation
DWS RREEF Real Assets C AAAPX 9.7% F 3.5% F 5.6% F 1.08 F Global Moderately Aggressive Allocation
DWS RREEF Real Assets R AAAQX 10.3% F 4.0% F 6.1% F 1.08 F Global Moderately Aggressive Allocation
DWS RREEF Real Assets S AAASX 10.7% F 4.5% F 6.6% F 1.08 F Global Moderately Aggressive Allocation
DWS RREEF Real Assets R6 AAAVX 10.9% F 4.6% F 6.7% F 1.08 F Global Moderately Aggressive Allocation

See All 1,545 Funds

(Data as of 9/30/2026)


Login to see if any of your mutual funds are consistent performers.
Top Bottom Funds

Performance Benchmarks

Returns for the major indexes and the fund categories, updated monthly, to use for comparison.

FUND CATEGORY 1-MONTH
RETURN		 YTD
RETURN		 3-YR
ANNUAL RETURN		 5-YR
ANNUAL RETURN		 10-YR
ANNUAL RETURN		 TOTAL RISK
INDEX		 YIELD EXPENSE RATIO
Large Blend (1.1%) 10.5% 20.3% 11.8% 13.8% 1.05 0.6% 0.81%
Intermediate Government (2.6%) (3.4%) 3.2% -1.1% 0.5% 0.44 3.7% 0.61%
Foreign Large Blend (2.9%) 10.7% 18.5% 8.6% 8.8% 1.03 2.2% 0.94%
Mid-Cap Blend (4.2%) 8.9% 14.1% 7.1% 9.9% 1.29 0.5% 0.98%
Small Blend (4.6%) 12.6% 15.0% 6.7% 9.7% 1.51 0.5% 1.04%

See All Fund Category Comparisons



(Data as of 9/30/2026)


GLOBAL ASSET CLASS 1-MONTH
RETURN		 YTD
RETURN		 3-YR
ANNUAL RETURN		 5-YR
ANNUAL RETURN		 10-YR
ANNUAL RETURN		 TOTAL RISK
INDEX		 YIELD EXPENSE RATIO
Allocation -2.1% 7.2% 14.3% 6.7% 8.0% 0.76 2.3% 0.87%
Fixed Income -2.6% -1.6% 4.8% 0.9% 2.1% 0.39 4.6% 0.81%
Equity -2.7% 10.8% 17.7% 8.2% 10.7% 1.28 1.1% 1.05%

See All Global Asset Class Comparisons



(Data as of 9/30/2026)


FUND GROUP 1-MONTH
RETURN		 YTD
RETURN		 3-YR
ANNUAL RETURN		 5-YR
ANNUAL RETURN		 10-YR
ANNUAL RETURN		 TOTAL RISK
INDEX		 YIELD EXPENSE RATIO
Commodities -0.6% 28.9% 15.8% 11.6% 8.3% 1.13 11.7% 1.13%
Allocation -2.1% 7.3% 14.3% 6.7% 8.0% 0.77 2.3% 0.87%
Taxable Bond -2.1% -1.0% 5.4% 1.4% 2.4% 0.37 5.0% 0.82%
International Equity -2.4% 12.1% 18.5% 7.4% 9.1% 1.18 1.7% 1.07%
U.S. Equity -2.7% 10.2% 17.4% 8.5% 11.8% 1.30 0.5% 0.98%

See All Fund Group Comparisons



(Data as of 9/30/2026)


INDEX 1-MONTH
RETURN		 YTD
RETURN		 3-YR
ANNUAL
RETURN		 5-YR
ANNUAL
RETURN		 10-YR
ANNUAL
RETURN		 TOTAL RISK
INDEX
S&P 500 (TR) (1970) -0.3% 12.7% 22.9% 13.8% 15.3% 0.84
MSCI EAFE GR USD -3.0% 10.8% 19.0% 9.9% 9.6% 0.88
S&P MidCap 400 TR -4.2% 9.9% 14.5% 8.0% 10.5% 1.05
Bloomberg US Treasury Long TR USD -5.0% -7.6% 1.0% -7.3% -2.1% 0.84
S&P SmallCap 600 TR USD -5.6% 14.1% 14.8% 6.2% 9.8% 1.28

See All Indexes



(Data as of 9/30/2026)


Top Bottom Funds

Equity Risk-Adjusted Returns

Equity fund returns adjusted for risk relative to the market, updated monthly.

FUND NAME TICKER CATEGORY 3-YR AVG
ANN'L
RISK-ADJ RET		 MARKET
RISK
INDEX
(1.00=S&P 500)		 3-YR ANN'L
STD DEV		 3-YR AVG
ANN'L RET
Permanent Portfolio Aggressi.... PAGRX Large Blend 25.6% 1.31% 16.2% 32.16%
Permanent Portfolio Aggressi.... PAGDX Large Blend 25.5% 1.31% 16.2% 31.92%
BNY Mellon Equity Income Fun.... DQIYX Large Value 25.0% 0.90% 11.2% 23.04%
BNY Mellon Equity Income Fun.... DQIRX Large Value 25.0% 0.90% 11.2% 23.04%
Fidelity Advisor Mega Cap St.... FZALX Large Blend 25.0% 0.94% 11.7% 23.76%
Indexes
S&P 500 (TR) (1970) 21.5% 1.00% 12.4% 21.48%
S&P MidCap 400 TR 12.7% 1.26% 15.6% 14.88%
S&P SmallCap 600 TR USD 11.7% 1.54% 19.1% 15.60%

See All (5358) Funds



(Data as of 9/30/2026)


FUND NAME TICKER CATEGORY 3-YR AVG
ANN'L
RISK-ADJ RET		 MARKET
RISK
INDEX
(1.00=S&P 500)		 3-YR ANN'L
STD DEV		 3-YR AVG
ANN'L RET
Indexes
S&P 500 (TR) (1970) 21.5% 1.00% 12.4% 21.48%
S&P MidCap 400 TR 12.7% 1.26% 15.6% 14.88%
S&P SmallCap 600 TR USD 11.7% 1.54% 19.1% 15.60%

See All (0) Funds



(Data as of 9/30/2026)


Articles

Crypto and Long-Term Bonds Boosted by Third-Quarter Rally

The top 25 and bottom 25 exchange-traded funds (ETFs) and mutual funds for the third quarter of 2026.

November 2026

Crypto and Long-Term Bonds Boosted by Third-Quarter Rally

The top 25 and bottom 25 exchange-traded funds (ETFs) and mutual funds for the third quarter of 2026.

November 2026

Semiconductors Process Big Second-Quarter Gains

The top 25 and bottom 25 exchange-traded funds (ETFs) and mutual funds for the second quarter of 2026.

August 2026

Customizing Your Mid-Cap Allocation With ETFs and Mutual Funds

An examination of the ETF and mutual fund options that can fill the mid-cap domestic equity portion of a portfolio.

August 2026

Semiconductors Process Big Second-Quarter Gains

The top 25 and bottom 25 exchange-traded funds (ETFs) and mutual funds for the second quarter of 2026.

August 2026

Copyright 2026 American Association of Individual Investors and Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.