Money 70: Best mutual funds and ETFs

Last year's roller-coaster market showed why it pays to be patient with your investments. The Money 70, our recommended list of mutual funds and ETFs, will help you buy and hold your way to your long-term goals.

By Penelope Wang, Money Magazine senior writer

(Money Magazine) -- For the Money 70, our recommended list of mutual and exchange-traded funds, 2009 was a year of vindication. After the vast majority of the funds on our list suffered steep losses in 2008s credit crisis, almost all rebounded strongly last year -- with many posting double-digit gains. But short-term returns arent the point. Its far more important for you to focus on long-term results.

This list was never intended to be a collection of hot funds. Instead, the point of the Money 70 is to give you a menu of high-quality funds and ETFs that you can use to construct a well-diversified portfolio, which in turn will help you achieve your long-term financial goals.

And over lengthy periods of time, Money 70 funds have proved worthwhile -- provided you stuck with them in good times and bad. Take the case of Royce Pennsylvania Mutual. In a decade where gains were hard to come by in the U.S. stock market, this small-cap fund earned 9.5% a year vs. 3.9% for small stocks in general. Yet by moving money into and out of the fund at the worst possible times, Pennsylvania Mutual investors earned just 3.9% annually, according to Morningstar.

The good news: Many Money 70 investors are more patient than average. For example, while Vanguard Windsor II returned 3.8% annually over the past decade, investors in the blue-chip stock fund earned nearly all of that: 3.4% a year.

It just goes to show that you dont need to try to outguess or outperform the market to be a successful investor. Just choose a sensible, long-term strategy and have the patience to hold on during inevitable bad times. This group of funds was designed to help you do just that.

See more on how we picked the funds and what changes we've made since last year.

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
Schwab S&P 500 Index Sel 25.3 0.7 0.09 100
Schwab Total Stock Market Index Sel 27.1 1.2 0.09 100
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
T. Rowe Price Mid-Cap Value 44.7 4.3 0.83 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
Blend
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
T. Rowe Price Small-Cap Value 22.3 1.6 0.92 2,500
Royce Pennsylvania Mutual Invmt 35.6 2.5 0.91 2,000
Royce Special Equity Invmt 25.5 3.5 1.15 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
Wasatch Small Cap Growth 46.6 1.1 1.21 2,000
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.
SPDR DJ Wilshire International Real Estate ETF 0.0 N.A. 0.00 N.A.
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 growth
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
T. Rowe Price International Discovery 62.3 8.9 1.24 2,500
Vanguard FTSE All-Wld ex-US SmCp Idx Inv N.A. N.A. N.A. N.A.
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
Fund 1yr. 5yrs. Expenses (as % of assets) Minimum initial investment
T. Rowe Price Retirement 2005 26.9 4.3 0.60 2,500
Vanguard Target Retirement 2035 29.5 2.2 0.18 3,000
Note: While Money Magazine recommends all target retirement funds in the T. Rowe Price and Vanguard fund families, data listed are for the T. Rowe Price Retirement 2005 and Vanguard Target Retirement 2035.
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