Money 70: The best mutual funds you can buy

Don't dwell on your losses. Focus on things you can control, like investing costs and consistency. That's what the MONEY 70 will help you do.

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By Penelope Wang, Money Magazine senior writer

(Money Magazine) -- Could 2008 have been any worse for fund investors? As we went to press, not a single stock fund made money, and defying the laws of diversification, many bond funds fell too. Still, the MONEY 70, our recommended list of mutual and exchange-traded funds, held up better than most. More than 60% of our actively managed funds ranked in the top half of their categories last year; over the past five, 83% beat their peers.

Of course, category-trouncing performance isn't the mission of the MONEY 70, since no one can predict future returns. Instead, we provide a mix of high-quality funds - including index funds and ETFs - which you can use to build a diversified portfolio. We stick with the criteria that matter most, like low fees, which let you keep more of your returns. When it comes to actively managed funds, we also look for consistent strategies and experience. And we care how well funds treat their shareholders. So we pay attention to Morningstar's stewardship grades, which rate such factors as a fund group's culture and regulatory history. As for performance, we focus on funds that rank in the top half of their peers over five years but make exceptions when a manager's style is out of favor.

This year we're making only two switches. First, we're dropping Matrix Advisors Value because its assets slipped below our $100 million minimum. Funds that small pose a greater risk of raising fees or merging. If you own it, though, there's no reason to sell. We're then adding Allianz NFJ Small Cap Value, a fund that invests in dividend-paying small stocks and that recently reopened. We're also bringing back a former MONEY 70 fund that reopened, Third Avenue Small Cap Value, which buys undervalued high-quality stocks. To fit it in, we're dropping Bridgeway Small Cap Value - a fund we like but that tends to have wilder swings.

Whichever funds you choose, be patient. Whether the recovery takes another five months or five years, you can be sure that the low fees, consistent strategies and trustworthy management of the MONEY 70 funds will keep working in your favor.  



Large Cap
Value
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
American Funds American Mutual A 24.9 2.1 0.60 250
Sound Shore 28.3 1.2 0.92 10,000
T. Rowe Price Equity Income 24.5 1.0 0.71 2,500
Vanguard Windsor II 28.2 1.1 0.39 10,000
Blend
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Fairholme 41.5 7.7 1.02 2,500
Fidelity Spartan 500 Index Investor 25.4 0.7 0.10 10,000
Fidelity Spartan Total Market Index Inv 27.0 1.1 0.10 10,000
FMI Large Cap 28.3 5.1 1.00 1,000
iShares S&P 500 Index ETF 0.0 N.A. 0.00 N.A.
Selected American Shares S 28.8 1.1 0.92 1,000
Vanguard 500 Index Investor 25.4 0.6 0.18 3,000
Vanguard Total Stock Mkt Idx N.A. N.A. 0.18 3,000
Vanguard Total Stock Market ETF N.A. N.A. N.A. N.A.
Growth
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
American Funds AMCAP A 36.4 1.6 0.74 250
Jensen J 23.5 2.3 0.96 2,500
T. Rowe Price Blue Chip Growth 41.1 1.5 0.80 2,500
Midcap
Value
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Fidelity Value 42.5 0.2 0.76 2,500
Perkins Mid Cap Value J 29.9 5.2 1.07 2,500
Blend
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
FAM Value Inv 21.2 -0.1 1.40 500
Vanguard Mid Capitalization Index 38.5 1.9 0.27 3,000
Vanguard Mid Cap ETF N.A. N.A. N.A. N.A.
Growth
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
FPA Perennial 43.6 2.1 1.02 1,500
Meridian Growth 35.5 2.9 0.86 1,000
PRIMECAP Odyssey Aggressive Growth 52.3 4.6 0.80 2,000
Small-cap
Value
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Allianz NFJ Small Cap Value D 23.1 4.2 1.22 1,000
Blend
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Third Avenue Small-Cap Value 27.6 0.1 1.10 10,000
Royce Pennsylvania Mutual Invmt 35.6 2.5 0.91 2,000
Vanguard Small Cap Index 33.2 1.0 0.28 3,000
Vanguard Small Cap ETF N.A. N.A. N.A. N.A.
Growth
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Royce Value Plus Svc 37.9 2.2 1.48 2,000
T. Rowe Price New Horizons 43.4 2.1 0.84 2,500
Multicap
Bridgeway Aggressive Investors 2 26.6 -1.3 1.20 2,000
Muhlenkamp 30.0 -3.8 1.18 1,500
Weitz Hickory 38.3 -2.9 1.31 2,500
Specialty
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Cohen & Steers Realty Shares 41.9 1.7 1.00 10,000
iShares Dow Jones Select Dividend Index ETF 0.0 N.A. 0.00 N.A.
iShares S&P GSSI™ Natural Resources Index Fund of iShares Trust 0.0 N.A. 0.00 N.A.
Third Avenue Real Estate Value 50.8 1.2 1.12 10,000
T. Rowe Price New Era 43.2 9.1 0.66 2,500
Vanguard REIT Index N.A. N.A. 0.26 3,000
Vanguard REIT ETF N.A. N.A. N.A. N.A.
Foreign
Large value
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Dodge & Cox International Stock 53.3 6.1 0.64 2,500
Oakmark International I 56.3 6.5 1.10 1,000
Large blend
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
American Funds EuroPacific Gr A 47.8 8.3 0.83 250
Fidelity Spartan International Index Inv 37.5 4.2 0.10 10,000
Vanguard Europe Pacific ETF N.A. N.A. N.A. N.A.
Vanguard FTSE All-World ex-US ETF N.A. N.A. N.A. N.A.
Vanguard International Growth Inv N.A. N.A. N.A. 3,000
Vanguard Total Intl Stock Index N.A. 5.9 0.34 3,000
Large growth
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Artisan International Inv 48.4 5.9 1.22 1,000
Small/mid value
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Third Avenue International Value 42.2 4.1 1.48 10,000
Small/mid growth
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
T. Rowe Price International Discovery 62.3 8.9 1.24 2,500
Emerging Markets
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
American Funds New World A 58.8 12.6 1.01 250
T. Rowe Price Emerging Markets Stock 96.6 14.6 1.24 2,500
Vanguard Emerging Mkts Stock Idx N.A. N.A. 0.39 3,000
Vanguard Emerging Markets ETF N.A. N.A. N.A. N.A.
Bond
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
American Funds American Hi Inc Tr A 50.7 4.6 0.70 250
Dodge & Cox Income 23.3 5.6 0.43 2,500
FPA New Income 4.1 4.0 0.61 1,500
Harbor Bond Instl 19.0 6.7 0.60 1,000
iShares Barclays TIPS Bond Fund 0.0 N.A. 0.00 N.A.
T. Rowe Price International Bond 23.5 5.1 0.81 2,500
Vanguard Inflation-Protected Secs N.A. N.A. 0.25 3,000
Vanguard Interm-Term Tx-Ex N.A. 4.2 0.20 3,000
Vanguard Short-Term Bond Index N.A. 4.8 0.22 3,000
Vanguard Short-Term Bond ETF 0.0 N.A. N.A. N.A.
Vanguard Total Bond Market Index N.A. N.A. 0.22 3,000
Vanguard Total Bond Market ETF 0.0 N.A. N.A. N.A.
Target-retirement
T. Rowe Price Retirement
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
T. Rowe Price Retirement 2005 26.9 4.3 0.60 2,500
T. Rowe Price Retirement 2020 36.2 3.5 0.73 2,500
Vangaurd Target Retirement
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
Vanguard Target Retirement 2025 26.8 2.5 0.18 3,000
Vanguard Target Retirement 2035 29.5 2.2 0.18 3,000


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