Key Points
Consider mutual funds for diverse, low-cost investment options like Fidelity 500 Index.
Vanguard Wellington offers a mix of stocks and bonds for lower volatility and stable returns.
Assess mutual funds’ tax efficiency and turnover rates to minimize capital gains taxes.
Premium Investing Services
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
View Premium Services
Mutual funds are pooled investment vehicles that collect money from many investors and invest it in a diversified portfolio of stocks, bonds, or other assets. These funds continue to play a key role in retirement planning, particularly in workplace plans such as 401(k)s.
However, as with any investment product, there are both good and bad mutual funds. Understanding how they work, how to invest in them, their advantages, and potential drawbacks is essential for investors looking to make informed financial decisions.
Six top mutual funds to consider for 2026
Each fund on this list has been chosen for its low investment minimums, low expense ratios, long track record, high diversification, and strong historical performance.
Ticker Information Table
Name and ticker
Current price
Fidelity Concord Street Trust – Fidelity 500 Index Fund (NASDAQMUTFUND:FXAIX)
$271.47
Fidelity Concord Street Trust – Fidelity Total Market Index Fund (NASDAQMUTFUND:FSKAX)
$214.59
Schwab Investments – Schwab 1000 Index Fund (NASDAQMUTFUND:SNXFX)
$16.74
Vanguard STAR Funds – Vanguard Total International Stock ETF (NASDAQMUTFUND:VTIAX)
$45.48
Vanguard International Equity Index Funds – Vanguard Total World Stock ETF (NASDAQMUTFUND:VTWAX)
$56.56
Vanguard Wellington Fund (NASDAQMUTFUND:VWELX)
$47.35
Data as of Oct 11, 2026. Showing 6 of 6 total entries.
NASDAQMUTFUND: FXAIX
Fidelity Concord Street Trust – Fidelity 500 Index Fund
Today’s Change
(0.61%) $1.64
Current Price
$271.47
Key Data Points
Day’s Range
$271.47 – $271.47
52wk Range
$271.47 – $271.47
The Fidelity 500 Index Fund (FXAIX+0.61%) is a premier low-cost mutual fund for gaining broad market exposure. Established in 1988, this fund tracks the S&P 500 index, providing investors with a straightforward, diversified method to invest in the largest companies in America.
The fund features an exceptionally low expense ratio of 0.015%, ranking it among the most affordable index funds available. It also requires no minimum investment, which allows investors at every level to participate.
Another appealing aspect of this Fidelity fund is its tax efficiency, driven by a low 2% turnover rate. Because it rarely trades stocks, it helps minimize taxable capital gains distributions. As of July 31, 2026, the fund has achieved an annualized total return of 15.07% before taxes over the previous 10 years.
2. Fidelity Total Market Index Fund
NASDAQMUTFUND: FSKAX
Fidelity Concord Street Trust – Fidelity Total Market Index Fund
Today’s Change
(0.63%) $1.34
Current Price
$214.59
Key Data Points
Day’s Range
$214.59 – $214.59
52wk Range
$214.59 – $214.59
The Fidelity Total Market Index Fund (FSKAX+0.63%) is a well-diversified, cost-effective index fund designed to give investors a glimpse into the entire U.S. equity market. Launched in 1997, this fund aims to track the Dow Jones U.S. Total <a s Change
(0.60%) $0.10
Current Price
$16.74
Key Data Points
Day’s Range
$16.74 – $16.74
52wk Range
$16.74 – $16.74
The Schwab 1000 Index Fund (SNXFX+0.60%) is a straightforward, low-cost mutual fund that provides investors with exposure to the 1,000 largest stocks in the U.S., based on market capitalization.
The fund is also tax-efficient, with a 3.14% turnover rate, resulting in minimal capital gains distributions. It features a low expense ratio of 0.05% and no minimum investment requirements, making it a budget-friendly choice. Over the past decade, this mutual fund has generated a 14.71% annualized total return.
4. Vanguard Total International Stock Index Fund Admiral Shares
NASDAQMUTFUND: VTIAX
Vanguard STAR Funds – Vanguard Total International Stock ETF
Today’s Change
(0.82%) $0.37
Current Price
$45.48
Key Data Points
Day’s Range
$45.48 – $45.48
52wk Range
$45.48 – $45.48
For affordable international diversification, the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX+0.82%) stands out as a top choice. This mutual fund tracks the FTSE Global All Cap ex US Index, encompassing over 8,500 stocks across both emerging and developed markets.
Like many Vanguard index funds, this option is quite tax-efficient, featuring a 4.4% turnover rate that helps limit capital gains distributions. It does require a $3,000 minimum investment, which might be a hurdle for some new investors. Nevertheless, it carries a reasonably low expense ratio of 0.09%.
Over the last 10 years, this Vanguard fund has produced a 9.34% annualized total return—a figure lower than that of U.S. stocks, as international markets have historically lagged. Still, for those aiming to balance their portfolio with global exposure, this fund remains a solid long-term selection.
5. Vanguard Total World Stock Index Fund Admiral Shares
NASDAQMUTFUND: VTWAX
Vanguard International Equity Index Funds – Vanguard Total World Stock ETF
Today’s Change
(0.71%) $0.40
Current Price
$56.56
Key Data Points
Day’s Range
$56.56 – $56.56
52wk Range
$56.56 – $56.56
For investors seeking a single fund that captures the entire global stock market, the Vanguard Total World Stock Index Fund Admiral Shares (VTWAX+0.71%) is an excellent pick. It tracks the FTSE Global All Cap Index, providing exposure to more than 10,000 stocks across the U.S., emerging, and developed markets in one package.
Similar to many passive index funds, this Vanguard offering is built for tax efficiency, with a low 3.4% turnover rate that helps minimize taxable distributions. The expense ratio of just 0.09% also keeps costs down, making it one of the most economical global stock funds available.
Over the last five years, this index fund has delivered an annualized return of 10.60%, benefiting from strong U.S. market performance while still offering broad international diversification. However, like most Vanguard Admiral Shares funds, it requires a $3,000 minimum investment.
NASDAQMUTFUND: VWELX
Vanguard Wellington Fund
Today’s Change
(0.49%) $0.23
Current Price
$47.35
Key Data Points
Day’s Range
$47.35 – $47.35
52wk Range
$47.35 – $47.35
The Vanguard Wellington Fund Investor Shares (VWELX+0.49%) is among the most resilient and time-tested mutual funds available. Launched in 1929, it has successfully navigated nearly a century of market cycles, providing an 8.41% annualized total return since its inception.
This fund has endured and prospered through major financial crises, including the Great Depression, the 1987 Black Monday crash, the dot-com bubble, the Great Recession, and the COVID-19 market downturn.
Unlike traditional index funds, this Vanguard fund is actively managed and does not follow a benchmark. Instead, it maintains a carefully curated portfolio: two-thirds are high-quality dividend-paying stocks chosen for value and stability, and one-third are investment-grade bonds, offering a blend of growth and income.
This allocation assists the fund in weathering market declines better than pure stock funds, making it a compelling choice for investors seeking reduced volatility without sacrificing returns.
However, this mutual fund is not the most tax-efficient option due to its mix of stocks and bonds, which, combined with a higher turnover rate from active management, can lead to taxable distributions. And while its 0.24% expense ratio is reasonable for an actively managed fund, it is higher than that of low-cost index funds.
Types of mutual funds
Equity funds: Invest primarily in stocks with the goal of long-term growth. These carry a higher risk but also a higher return potential.
Fixed-income funds: Focus on government, corporate, or municipal bonds. They aim to generate a steady income with lower volatility than stock funds.
Balanced funds: Combine stocks and bonds in one portfolio in various proportions to offer both growth and stability.
Money market funds: Invest in short-term, high-quality debt instruments. These aim to preserve capital with a fixed NAV per share of $1 and pay modest strategies or invest in assets like commodities, real estate, or hedge fund-style approaches to diversify beyond stocks and bonds.
Benefits and risks of mutual funds
Potential benefits of mutual funds include:
Access to professional portfolio management without the need to pick individual securities.
Built-in diversification, spreading risk across many holdings in one fund
Automatic dividend reinvestment to compound returns over time
Lower trading costs for long-term investors, since there’s no need to buy or sell frequently
Wide range of investment strategies, from conservative bond funds to aggressive stock funds
Potential risks of mutual funds include:
Higher expense ratios on average compared to ETFs, which can erode total returns over time
Less tax efficiency because capital gains are distributed annually, even if you didn’t personally sell shares
Limited trading flexibility since mutual funds are priced only once per day after markets close, whereas ETFs trade intraday
Less variety than ETFs, especially when it comes to sector-specific, leveraged/inverse, and thematic strategies
Methodology: How these mutual funds were chosen
We focused on mutual funds that are practical for long-term retail investors to own. Cost was a major consideration, including both low expense ratios and minimal investment minimums. We also favored funds with low portfolio turnover, which can reduce trading costs and improve tax efficiency by limiting the realization and distribution of capital gains.
Finally, we prioritized mutual funds with long track records and substantial asset bases. An established history provides more information about how a fund has performed across different market environments, while a large asset base can indicate sustained investor demand and reduce the risk of a fund being merged or closed.
Should you invest in mutual funds?
Whether you should invest in mutual funds depends on the options available to you. If you’re investing through a workplace 401(k) plan, mutual funds might be your only choice since many employer-sponsored plans don’t offer ETFs. If that’s the case, mutual funds can be a solid option for building long-term wealth.
If you’re investing in a self-directed brokerage account, there’s usually no compelling reason to choose mutual funds over ETFs, unless there’s a specific strategy that appeals to you or you find a fund with ultra-low fees, like Fidelity’s zero-cost index funds.
