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While investors may have a wide variety of mutual funds to choose from, there are a handful products that have managed to rake in billion of dollars in net assets over the years. The U.S. mutual fund market has approximately $15 trillion in total assets under management. In this piece, we take a look under the hood of the five most popular mutual funds, highlight each funds’ investment strategy, portfolio composition, share class availability, expenses, management, and performance.

PIMCO Total Return Fund PTRAX

  • Manager: Bill Gross
  • Share Classes Available: A, B, C, D, Institutional, Admin, P, R
  • Expenses per Share Class: 0.85%, 1.6%, 1.6%, 0.75%, 0.46%, 0.71%, 0.56%, 1.1%

Since launching in 1987, the ultra popular Total Return Fund has amassed more than $145 billion in net assets under management. Managed by the bond king Bill Gross himself, this mutual fund is designed to be a core fixed income holding for individual and institutional investors alike.

The Total Return Fund’s objective is to seek maximum total return, consistent with preservation of capital and prudent investment management. To achieve this, the fund focuses on higher-quality, intermediate-term bonds from across the globe. The fund’s portfolio, however, primarily consists of U.S. government-related securities. The fund also allocates a significant portion of its asset to mortgage-related securities, as well as features exposure to both developed and emerging market bonds.

Below is a chart depicting the growth of a $10,000 investment in the Total Return Fund:

The growth of a $10,000 investment in the Total Return Fund

Please note that the growth of $10,00 is calculated at NAV and assumes that all dividend and capital gain distributions were reinvested. From 2004 to 2013, the Total Return Fund’s annual returns have been positive every year except for 2013, when the fund lost 2.30%. Its best year during this time frame was in 2009, when the fund gained 13.33%.

Vanguard Total Stock Market Index Fund VTSAX

  • Manager: None, Indexed
  • Share Classes Available: Investor, Admiral, Signal, Institutional, Institutional Plus
  • Expenses per Share Class: 0.17%, 0.05%, 0.05%, 0.04%, 0.02%

Making its debut in 1992, the Vanguard Total Stock Market Index Fund is a popular tool for investors looking to gain broad, diversified exposure to the U.S. stock market. The fund seeks to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market, including large, mid, small, and micro cap stocks listed on the NYSE and Nasdaq.

Given its broad focus, the fund offers exposure to a wide array of sectors, though financials, technology, consumer services, industrials, and healthcare equities receive the largest allocations. Furthermore, the majority of the 3,864 stocks in the fund’s portfolio are large- and mid-cap stocks; the median market cap of the stocks is $48.5 billion.

Below is a chart depicting the growth of a $10,000 investment in the Total Stock Market Index Fund:

$10,000 investment in the Total Stock Market Index Fund

If investors would have made a $10,000 investment in the Total Stock Market Index Fund on January 31, 2014, they would now have roughly $21,000. Within that time frame, the fund has only logged in one negative annual return, which was in 2008 during the financial crisis.

Fidelity Contrafund FCNTX

  • Manager: William Danoff
  • Share Classes Available: Investor, K
  • Expenses per Share Class: 0.67%, 0.56%

This fund has been around since 1967, and has quickly grown to become an investor favorite. Managed by William Danoff since 1990, the Contrafund seeks to invest in securities whose value Fidelity believes is not fully recognized by the broader market.

Given its contrarian-style focus, the resulting portfolio consists of mostly large-cap growth stocks, the majority of which are information technology stocks, which account for a quarter of the portfolio. The contra fund also allocates roughly 10% of total assets to the following sectors: consumer discretionary, financials, healthcare, and consumer staples.

Below is a chart depicting the growth of a $10,000 investment in the Total Stock Market Index Fund:

$10,000 investment in the Total Stock Market Index Fund

From 2005 to 2013, the Contrafund has only logged in two negative annual performances – one in 2008 and the other in 2011. Its best year was 2013, when the fund gained 34.15%.

The Income Fund of America AMECX

  • Managers: Hilda Applbaum, David Barclay, David Daigle, Joanna Johnsson, James Mulally, Dina Perry, John Smet, Andrew Suzman, Steven Watson
  • Share Classes Available: A, B, C, F1, F2, R1, R2, R3, R4, R5, R6
  • Expenses per Share Class: 0.58%, 1.33%, 1.38%, 0.65%, 0.41%, 1.39%, 1.36%, 0.94%, 0.64%, 0.34%, 0.29%

Launching in 1973, this American Funds offering aims to provide current income, while it secondarily strives for capital growth. To achieve its objective, the fund invests in both equity and fixed income securities, as well as preferred stocks.

The Income Fund’s portfolio allocates more than 70% to U.S. and foreign common stocks, roughly 15% to U.S. fixed income securities, about 3% to non-U.S. bonds, and approximately 5% in cash and cash equivalents. In its equity holdings, roughly 10% is allocated to pharmaceuticals, while oil & gas, telecommunication, chemicals, banks, and REITs are also given meaningful allocations.

Below is a chart depicting the growth of a $10,000 investment in the Income of America Fund:

Growth of a $10,000 investment in the Income of America Fund

If investors were to have reinvested distributions, a $10,000 investment in the fund made 20 years ago would be worth roughly $55,000 today. The value without reinvestment, comes out to be roughly $21,000. Over the last 20 years, the fund has only logged in three negative annual returns – in 1994, 2002, and 2008.

The Growth Fund of America AGTHX

  • Managers: Donnalisa Parks Barnum, Barry Crosthwaite, J. Blair Frank, Gregg Ireland, Carl Kawaja, Michael Kerr, Ronald Morrow, Donald O’Neal, Martin Romo, James Rothenberg, James Terrile, Bradley Vogt
  • Share Classes Available: A, B, C, F1, F2, R1, R2, R3, R4, R5, R6
  • Expenses per Share Class: 0.70%, 1.46%, 1.50%, 0.71%, 0.44%, 1.44%, 1.40%, 0.98%, 0.68%, 0.39%, 0.34%

Another American Funds product, the Growth Fund of America made its debut in 1973 and has since become one of the most popular mutual funds on the market. The fund’s objective is to provide growth of capital. Because it is actively managed, the fund has the flexibility to shift assets towards whichever corner of the market presents the best growth opportunities.

Like its income counterpart, the Growth Fund can invest in both stocks and bonds, but because of its focus on growth, the vast majority of its portfolio consists of U.S. equities, though foreign equities are also given meaningful exposure. The fund does, however, have some exposure to fixed income securities, roughly 0.1%. In terms of equity sector allocations, the greatest weightings go towards biotechnology, oil & gas, internet, media, software, and semiconductors sectors.

Below is a chart depicting the growth of a $10,000 investment in the Growth of America Fund:

The growth of a $10,000 investment in the Growth of America Fund

Over the last 20 years, a $10,000 investment in the Growth of America fund would value approximately $78,000 today. Within that same time frame, the fund has logged in four negative annual returns – in 2001, 2002, 2008, and 2011.

The Bottom Line

All of these funds have become investor favorites over the years, with many being used as core building blocks in institutional and individual portfolios alike. With a combination of clear-cut investment objectives, management expertise, and a reliable track record, these five mutual funds continue to rake in assets year after year.

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