Top Mutual Funds

The mutual fund industry is growing at a very strong pace due to the growing confidence of investors. Today, there are several companies offering quality mutual funds which can be the best way to deploy extra cash which you have to earn high returns. The variety available in mutual funds makes them one of the finest investment options for large-scale wealth creation. Before we know which are the top mutual funds for 2011 and beyond, let us first understand how to pick mutual funds for better gains.

Understand Your Risk Taking Ability

Understanding your risk taking ability is of utmost importance while choosing mutual funds. Some mutual funds invest your money in high risk mid cap and small cap stocks and are known as mid cap funds and small cap funds respectively. The performance of these funds depends on the company's stock price and hence the risk is high. If you are a conservative investor, then you can go with the top performing mutual funds in the large cap class which are much safer.

Look for Funds with a Good Track Record

The best mutual funds would be those which have delivered consistent returns to their investors. If you study the performance of the funds for the past five years, you will be able to distinguish the performing ones from the non performing ones. Look at what percentage annual returns investors got and what strategy was adopted by the fund managers of the fund. Most investment advisers would suggest you to invest in mutual funds of multi-national financial conglomerates.

Choose a Diversified Mutual Fund

A diversified mutual fund would be a better choice than the high risk funds. In such a fund, the investments are made in companies of diverse sectors which reduces the risk of total under performance. The fund manager is able to protect and increase the portfolio value of their clients with this strategy. Over the years, diversified mutual funds have given stable returns between twelve to twenty-five percent per year.

Investors wishing to invest in top mutual funds should remember that they should invest in two or three quality funds instead of just one fund to increase the chances of getting desired returns. At the same time, do not invest in too many funds and be very sure as of why you are choosing a particular fund. At this time, one should also be aware of the concept of no load mutual funds. Here, the word 'load' refers to the charges such as management fees, brokerage commissions as well as non managerial expenses which are taken by the mutual fund companies from general investors. So, no load mutual funds would be a great investment option for the longer term. Here are the best no load mutual funds:

• Old Westbury Fixed Income Fund
• Fairholme Fund
• Delafield Fund
• Fidelity Short-Term Bond Fund
• Fidelity Low-Priced Stock Fund

Ideal Mutual Funds for Investors

Here are some fine mutual fund options for investors:

• Vanguard Wellington
• DSPBR Balanced
• Dreyfus International Bond
• Principal High Yield A
• Templeton Global Bond advantage
• Aegis High Yield
• American Funds Capital Income Builder
• UBS PACE High Yield P
• Primecap Odyssey Growth
• ING Pioneer High Yield I
• T. Rowe Price Emerging Markets
• Rydex High Yield Strategy A

Hopefully, this article on top mutual funds will help you in selecting the right fund. For those who have little knowledge of the stock markets, mutual funds is the best place for investment. So, take advantage of these opportunities to make money for yourself. All the best!

DISCLAIMER: This article is just for reference purposes and does not recommend any stock market transactions.