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What To Look For In The Best Mutual Fund Companies

Mutual funds bring investing within reach of the average American, but choosing the best can be hard. We share what to look for when choosing the best mutual fund company.

Mutual funds are a great choice for Americans who want to invest, but there's still a wide range of choices to make. There's no single ‘best' mutual funds company for every investor, since much depends on the amount you're investing and how involved you want to be in the choice of funds. That said, there are some issues that investors should always look out for when choosing a mutual funds company, such as fees, the range of funds, and the amount of information shared with investors. Discover the key issues to look for in the best mutual fund companies in the US.

Fees and Expenses

While the returns you'll get on a fund are important, the fees and expenses that accompany your investment can't be ignored. Transaction fees can range all the way from $0 for house funds to $35 and more, which could make a significant dent in your returns, especially if you're investing small amounts. In general, it's good to bear in mind that the funds managed by your brokerage company will carry lower fees than those managed by a different company.

So, if you want to invest in Vanguard funds, you’ll get a better deal if you buy them through Vanguard itself, which charges no fees for Vanguard funds but between $8 and $20 for non-Vanguard options. Fidelity also charges no commission for its own mutual funds, but $49.95 for non-Fidelity funds. Vanguard does offer the option of adding small amounts to your initial investment for just $3 per transaction, as long as you’ve invested at least $1,000 when you purchased the fund and add at least $100, a minimum of twice per year.

One of the cheapest ETF options is the BlackRock iShares Core S&P Total Stock Market, which comes commission-free for even just one share. E*Trade charges a reasonable $19.95 on all non-NTF (No Transaction Fee) funds, and Charles Schwab tops the scale with a $76 fee on non-NTF funds. Fortunately, it does waive that fee if you purchase a fund that charges sales loads.

Minimum Investment Amount

If you have a few thousand dollars to invest in mutual funds, the minimum investment amount is probably not something you'll look at closely. But, for the millions of investors who have just a few hundred dollars, it’s pretty important. Mutual funds that have no investment minimum include Merrill Edge and TD Ameritrade, both of which offer thousands of NTFs and other mutual funds, which you can purchase with no investment minimum.

E*Trade has no minimum for IRAs and just a $500 minimum investment amount for a regular brokerage account. It does have a higher minimum amount for its actively-managed ETF portfolio, which requires $5,000 to purchase a fund, but that’s to be expected for a more hands-on option. In terms of funds that do require a minimum purchase amount, T. Rowe Price is fairly standard in demanding a minimum of $1,000 for IRAs and $2,500 for a non-IRA vehicle. Fidelity also requires an initial investment amount of $2,500 for non-IRAs although there’s no minimum for IRAs. Interestingly, Charles Schwab has an investment minimum of $1,000, but that can be avoided if you set up monthly auto-deposits of at least $100 when you purchase the fund.

Information and Research Shared with Investors

Even if you intend on passive investments, it's vital to know something about the funds in which you're investing. It's also almost impossible to make an informed decision about the best mutual fund for you without the right information from the fund companies. Fortunately, most of the best companies put out regular bulletins about their best funds and recommendations for future investments. E*Trade shares an All-Star list every quarter which highlights their analysts’ top recommendations, Merrill Edge produces the best funds according to its in-house investment experts, and TD Ameritrade similarly publishes lists of the best funds according to Morningstar evaluations.

T. Rowe Price stands out for its research and planning tools. The Mutual Fund Research Tool enables users to search for information about funds by category, Morningstar rating, and family, while the Asset Allocation Planning tool helps investors create a mixed portfolio and the FuturePath is a powerful financial planning simulator that shows how various life events will affect your investment plan. Fidelity is another excellent choice for research about mutual funds. It has an impressive stable of data partners including Morningstar and Lipper and provides investment educational resources both online and in-person at various nationwide branches.

Number and Range of Funds Available

The best mutual fund companies are the ones that field a large number of funds, which cover a wide range of investment types. For example, BlackRock, which recently purchased iShares, has a vast store of open and closed-end mutual funds, Exchange-Traded Funds (ETFs), unit trusts, and other alternative investment vehicles. Franklin Templeton also has a range of different types of mutual funds, including ETFs, closed-end funds, and retirement funds. Likewise, Scottrade has numerous retirement accounts, self-managed trading accounts, and NTFs, while Merrill Edge has over 3,300 NTFs and TD Ameritrade has over 4,100 NTFs for investors who don’t want to pay fees. Fidelity offers an entire range of investment options, from retirement funds such as IRAs and 401(k) plans to actively-managed funds that cover sector funds and main fund categories.

 

E*Trade and Vanguard are among the mutual fund companies that offer a middle-ground fund that falls somewhere between a fully self-managed portfolio and passive mutual funds. These allow investors to choose between a mix of ETFs and actively managed mutual funds, or an all-ETF portfolio. E*Trade requires a minimum investment of $5,000 for this service and charges a 0.3% management fee. It uses a combination of robo-advisors and DIY investment decisions. Vanguard’s offering draws on a dedicated human financial advisor along with robo-advisors and DIY fund management. For Vanguard, you’ll need an investment minimum of $50,000 and will pay a 0.3% management fee.

Use Mutual Funds to Start Investing Today

No matter how little or how much you're planning to invest, you can find a mutual fund company which helps you to begin investing. With plenty of research and information, a range of fund options, and many different fee levels, there’s a mutual funds company for every investor.

How we created this
list
Complied from “Best of” lists published by the world’s most trusted sources, and with our own recommended brands peppered in - this Top10 list aims to help consumers make smarter decisions.