MONEY 50 (2015 Edition): The Worlds Best Mutual Funds and ETFs

MONEY 50 (2015 Edition): The Worlds Best Mutual Funds and ETFs

MONEY 50 (2015 Edition): The Worlds Best Mutual Funds and ETFs

Updated: January 4, 2016 11:08 AM ET Originally published: January 5, 2015

Heres the updated2016 editionof MONEY 50: The Worlds Best Mutual Funds and ETFs.

Over the past five years of impressive stock and bond returns, the rising tide lifted nearly all boats. Alas, tides ebb, and the markets have been high for longer than usual. Its time to look at what matters to you not only when seas are calm, but also when theyre stormy.

Thats the thinking behind the MONEY 50, our selection of the worlds best mutual and exchange-traded funds. Note that we didnt say top-performing or hottest. Instead, by sticking to low-cost portfolios run by rock-solid management, the MONEY 50 is meant to give you the best shot possible at outperformance over decades, not months or years.

How to use the list? The funds are broken into three basic categories building-block, custom, and single-decision each of which is meant for a different purpose.

: Use these as your core holdings. These are 14 low-fee index funds both traditional mutual funds and ETFs, which you buy and sell like stock that closely track market benchmarks such as the S&P 500. The goal with here isbroad diversification.

: Use these to augment your core holdings with alternative investments such as real estate or natural resources. You can also use them totilt your portfoliotoward asset classes that tend to outperform the market over the long run, such as the stocks of smaller companies or value stocks, which are cheap relative to their earnings per share.

: For those who want to make just a single investment decision, these two target retirement-date fund offerings grow more conservative as you get older.

Two final notes: First, for help with some of the terminology in the MONEY 50, youll find a glossary below the tables; and second, for more about how we choose the MONEY 50 funds, and how the list changed this year compared to last,read this.

And now, the worlds 50 best mutual and exchange-traded funds:

These funds and ETFs, which offer you exposure to big chunks of the stock and bond markets, should be used for the core part of your portfolio that youll hold on to for years. because youre seeking broad market exposure, low-cost diversified index funds are your best bet.

Supplement your core holdings with these funds to give your portfolio a tilt toward certain kinds of stocks and bonds, diversify more broadly, or play a hunch.

Dont want to put together a portfolio on your own? Then use one of these professionally managed funds that hold a diversified mix of stocks and bonds.

Vanguard Target Retirement 2035 Fund Investor Shares

NOTES: 1. Net prospectus expense ratios were used. 2. Total return figures are as of Dec. 8. 3. Five-year returns are annualized. 4. 4.25% sales load. 5. Shares available only through fund company. ETFs do not have a minimum initial investment. SOURCES: Lipper and fund companies

Large-cap: Invests in shares of firms with stock market values, or market capitalizations, of $10 billion or more

Small-capandmidcap: Invest in smaller companies

Specialty: Invests in assets that dont move in sync with the broad stock or bond market

Target date: Provides exposure to a mix of stocks and bonds appropriate for your ageand gradually grows more conservative over time

Balanced: Offers you exposure to a mix of stocks and bonds, but doesnt grow more conservative over time

Value: Looks for stocks that are selling at bargain prices

Growth: Focuses on companies with fast-growing earnings

Blend: Owns both growth- and value-oriented stocks

Short term: Owns bonds that mature in about two years or less

Intermediate term: Owns bonds that mature in two to 10 years

Multisector: Can buy foreign or domestic bonds of any maturity

Inflation-protected: Owns bonds whose value at least keeps pace with the consumer price index

Read next:How MONEY Selected the 50 Best Mutual Funds and ETFs

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