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MONEY 50: The Worlds Best Mutual Funds and ETFs

Angus Greig

Our list of the world’s best mutual and exchange-traded funds can steer you safely toward your goals—even when the going gets rough.

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.

• Building-block. 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 is broad diversification .
• Custom. Use these to augment your core holdings with alternative investments such as real estate or natural resources. You can also use them to tilt your portfolio toward 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.
• Single-decision. 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:

Building-Block 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.