Under the Hood of the 10 Biggest Mutual Funds

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Mutual Fund Education

Under the Hood of the 10 Biggest Mutual Funds

Aaron Levitt Oct 14, 2014

Since their creation, mutual funds have helped investors—both retail and institutional—meet their goals. The structure is perfectly suited to allow investors access to a wide range of stocks, bonds and other assets all under one-ticker. As such, several successful funds have ballooned in assets under management – to the tune of billions of dollars, and in some cases hundreds of billions.
For those investors looking to add mutual funds to their portfolios, these immensely popular funds got this big for a reason. Ultimately, they may be some of the best bets for your portfolio dollars. Below, we present the 10 biggest mutual funds in the U.S.

Be sure to also read about the 7 Questions to Ask When Buying a Mutual Fund.

1. Vanguard Total Stock Market ( VTSMX, VTSAX, VITSX, VTI)

Assets Under Management: $401.2 billion

Strategy: The Vanguard Total Stock Market is a passive index fund that tracks the CRSP US Total Market Index. This index represents approximately 100% of investable companies in the domestic equity market and includes exposure to small-, mid- and large-cap U.S. stocks. Ultimately, the fund can be used as a core position to provide broad stock exposure. That fact has helped it amass a monstrous $400 billion-plus in assets from investors of all walks.

Performance: As a broad index fund that tracks the market, the Vanguard Total Stock Market has done a pretty good job of tracking the market. VTSMX has returned 8.67% annually over the last 10 years.

Learn more about whether Mutual Fund Benchmarks Matter.

VTSMX 10-Year Performance
Expenses: as a Vanguard sponsored investment, the fund features dirt-cheap operating costs. Expenses run 0.17% to an ultra-dirt-cheap 0.02% – depending on which share class is purchased. The minimum investment for the regular Investor class shares is $3,000.

2. Vanguard 500 Index Fund (VFIAX, VFINX, VINIX, VOO)

Assets Under Management: $368.3 Billion

Strategy: Like the number one selection on this list, fellow Vanguard fund—the 500 Index Fund—is a passively managed mutual fund designed to track an index. In this case, we’re talking about the venerable S&P 500. The U.S. large-cap index is widely recognized as a benchmark of stock market performance. The fund is designed to be a core position for investors wanting exposure to these large-cap stocks.

Performance: Given the mutual fund’s full-replication strategy and size, the Vanguard 500 has done an amazing job of tracking the S&P since its inception – minus its minimal expenses. The fund has managed to produce a 7.89% return over the last 10 years.

VFIAX 10-Year Performance
Expenses: Like all Vanguard funds, the 500 Index Fund has rock bottom expenses, which range from 0.02% to 0.17%, as well as offering no sales-loads. That’s basically free exposure to the large-cap segment of the market. All for an investment of $3,000.

Be sure to see the Complete Guide to Mutual Fund Expenses.


Assets Under Management: $221.6 Billion

Strategy: The PIMCO Total Return is an actively managed bond fund that doesn’t just focus on the income side or coupons of the asset class. Former manager Bill Gross and the current team at PIMCO will buy or sell whatever sector of the bond market they deem is a good bet at the time. However, the fund’s primary portfolio consists of intermediate-term, investment grade bonds.

Performance: Under Bill Gross’s tenure, Total Return has been the envy of most bond funds. His ability to choose correctly has added about 1 to 2 percentage points in return above broad bond indexes. All in all, Total Return has managed to produce a 5.99% average return over the last 10 years.

PTTAX 10-Year Performance
Expenses: While some shares classes of Total Return come with a 3.75% sales charge, many investors have access to no-load or load-waived versions of the fund in their retirement plans. Operating expenses for Total Return average 0.85% a year. Minimum investment for the fund is $1,000.

4. American Funds Growth Fund of America (AGTHX)

Assets Under Management: $145.2 Billion

Strategy: The American Funds Growth Fund of America is designed to aggressively grow investors’ capital over the long haul. Its mandate allows it to invest in any U.S. stock where its managers see the best opportunities. AGTHX invests at least 65% of its assets in common stocks. However, it may also own in convertibles, preferred stocks, U.S. government securities, bonds and cash equivalents as its managers see fit.

Performance: Given its size, AGTHX has 12 different portfolio managers. Yet that large team has done a good job of guiding AGTHX to good returns. Since its inception in 1973, the fund has managed to return 13.88% annually and over the last 10 years AGTHX has returned 9.25%.

See also How to Read Your Annual Mutual Fund Report.

AGTHX 10-Year Performance
Expenses: Expenses for AGTHX run just 0.7% – below its Lipper category average. However, the fund does come with a nasty 5.75% sales-load. Minimum investment is $250.

5. American Funds EuroPacific Growth (AEPGX)

Assets Under Management: $128.1 Billion

Strategy: Like its sister fund at number 4 on this list, the American Funds EuroPacific Growth is designed to aggressively grow investors’ capital over the long haul. However, unlike the previously mentioned AGTHX, AEPGX does this by betting on developed market international stocks. Its mandate also allows its managers to bet on firms of all sizes—from small-caps to mega-caps—as well as convertibles, preferred stocks. At least 80% of the fund’s assets must be invested in securities of issuers domiciled in Europe or the Pacific Basin

Performance: Like AGTHX, AEPGX’s team of managers has done a good job of navigating the fund to good returns. Since its inception in 1984, AEPGX has managed to return 10.49% annually. Over the last 10 years, AEPGX has managed rack up 8.83% annual returns.

AEPGX 10-Year Performance
Expenses: Expenses for AEPGX are a bit higher than its sister fund at 0.84% and still have that 5.75% sales-load. However, that load and expense ratio haven’t hurt the fund on the performance front. The minimum investment for the fund is $250.

6. Fidelity Cash Reserves (FDRXX)

Assets Under Management: $115.5 Billion

Strategy: Investors of all sizes need a parking place for their cash while they await good opportunities. The Fidelity Cash Reserves fund is the preferred method for doing that. The fund is a money market mutual fund and invests in very short-term bond securities of domestic and foreign issuers as well as repurchase agreements. As a money market mutual fund, FDRXX seeks to preserve the value of an investment at $1.00 per share.

Performance: Given that short-term interest rates are near zero, FDRXX’s return hasn’t exactly been amazing over the last few years. Its three-year annual return is just 0.01% and 10-year return is just 1.66%. However, insane returns aren’t necessarily the point of investing in the fund – liquidity is.

FDRXX 10-Year Performance
Expenses: Expenses for FDRXX run 0.24%, but they are currently being waived given the low interest rate environment. The minimum investment for the fund is $2,500.

7. Fidelity Contrafund (FCNTX)

Assets Under Management: $108.5 Billion

Strategy: The Fidelity Contrafund is all about being a contrarian investor. Manager William Danoff’s strategy for the fund is to seek stocks whose “value” has not been fully recognized by the market and public. He will screen for various metrics, buy and hold until they reach his price targets. Sometimes that process can take years.

Performance: Danoff has been guiding the fund since 1990, and under his leadership FCNTX has managed to beat the S&P 500 by a wide margin. Over the last 10 years, Contra has managed to produce annual returns of 10.28%.

FCNTX 10-Year Performance
Expenses: Expenses for FCNTX run 0.67%. That is more expensive that the typical S&P 500 index fund, but it could be worth it as Danoff has managed to produce better longer term returns. Like all Fidelity funds, FCNTX has a minimum investment of $2,500.

8. Franklin Income (FKINX)

Assets Under Management: $97 Billion

Strategy: The Franklin Income Fund is what’s called a hybrid fund, which means it will own a variety of asset classes. In this case, FKINX will own corporate, foreign and U.S. Treasury bonds, as well as stocks with relatively high dividends in an effort to create a high and stable income stream for its shareholders. Lead manager Edward Perks uses the fund’s broad mandate to select securities that present the best opportunities as market conditions change.

Performance: FKINX is one of the nation’s oldest mutual funds, having been founded in 1948. Since that time, the fund has had impressive returns of 10.61%. Over the last 10 years, that return dropped to 8.15%. The fund currently yields 4.9%.

FKINX 10-Year Performance
Expenses: Expenses for FKINX run 0.62%. However, that amount doesn’t include the 4.25% front-end sales-load nor the on-going 0.15% 12b-1 fee. The minimum investment is $1,000.

Be sure to see the Cheapest Mutual Funds for Every Investment Objective.

9. Vanguard Wellington Fund (VWELX, VWENX)

Assets Under Management: $87.6 Billion

Strategy: The Vanguard Wellington Fund is the world’s first balanced fund—owning both stocks and bonds in a set proportion – currently at 60%–70% stocks, 30%–40% bonds. The stock allocation will focus on large- and mid-cap U.S. stocks, while the bond allocation will focus on all levels of duration with regards to government and investment-grade corporate bonds. This broad focus has some market pundits believing that VWELX is the only mutual fund an investor can own.

Performance: The dual focus of stocks and bonds has helped VWELX weather some nasty storms—like the Great Depression, 1987’s Black Monday, the Dotcom Bust and the Great Recession—since its inception in 1929. All in all, VWELX has returned 8.43% over the last 10 years.

VWELX 10-Year Performance
Expenses: Even though it’s actively managed, as a Vanguard offering Wellington is still cheap at 0.18% in expenses. Sadly, despite being a great mutual fund, Vanguard recently closed the fund to new investors as assets swelled.

10. Dodge & Cox International Stock (DODFX)

Assets Under Management: $67.3 Billion

Strategy: The Dodge & Cox International Stock mutual fund seeks the long-term growth of principal and income. It does this by betting on stocks issued by non-U.S. companies from both the developed and emerging world. The fund’s management team focuses in on countries whose economic and political systems appear more stable and are believed to provide some protection to foreign shareholders. Like all the funds in the Dodge & Cox family, stocks are selected via a committee approach, in which firms are placed up for vote for inclusion in the fund. That rigorous approach has helped DODFX on the returns front.

See also 10 Ways to Beat Inflation with Mutual Funds.

Performance: To say that DODFX has been a great fund isn’t doing it justice. Over the last 10 years it has managed to produce an annual return of 9.55%. That’s about 2% more than its benchmark index each year. The combination of stock selection and then committee votes are the key to that extra return.

DODGX 10-Year Performance
Expenses: The fund’s extra performance comes relatively cheap. DODGX only charges 0.65% – which is well below its Lipper average for international funds. The investment minimum for the fund is $2,500. However, it is available in a ton of retirement and 401(K) plans.

The Bottom Line

If you’re looking for a mutual fund to invest in, be sure to do your research and see if any of the funds above fit your investing goals. They’ve become the largest funds in the world for a reason, and they all offer different benefits for investors.

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