In this piece, we will take a look at the 20 best mutual funds in 2023.
Mutual funds are among the most popular investment vehicles in the U.S. These allow investors to put their money in a variety of financial products such as stocks, bonds, and money market securities. At the same time, they also allow for portfolio diversification, have low costs of entry, and enable individuals to have liquid assets that can be redeemed at any time for some cash.
Data from Investment Company Institute (ICI) shows that more than half of American households and roughly one third of the total population hold their assets in mutual funds. Most of these households have an annual income that is less than $150,000 and even though mutual funds themselves provide for portfolio diversification, the households had also diversified their fund holdings as well, with more than 80% holding more than one fund. The primary purpose of the investment was to save for retirement, and with the passage of time, employer sponsored plans had started to play a greater role in encouraging mutual fund ownership. This is due to the fact that out of those who had purchased their first fund after 2010, 68% were brought on board through their employer, while 53% of households that had bought a fund prior to 1990 were introduced through the employer option. However, most of these people had also moved forward to other funds as well, with 45% of the households also owning funds outside their employer plan while 28% chose to only focus on the sponsored offering instead.
Broadly speaking, there are four kinds of mutual funds. These are money market funds, bond funds, stock funds, and target funds. Out of these, the money market funds have the least risk as they limit investments into high grade securities issued by governments or companies. The stock and bond funds are riskier since there are a wide variety of both of these securities to pick from, with the level of risk depending on the issuer. For instance, a government bond issued by the U.S. government or by Apple Inc. (NASDAQ:AAPL) is less risky than a bond issued by a developing country facing a funding crunch. However, the latter often offers interest rates in the double digit to compensate for this higher risk, with the price of the bond closely related to the issuer’s macroeconomic and political situation. Finally, the target funds are customized vehicles designed for retirement planning and generally invest in a combination of stocks, bonds, and other securities. The investors make money from mutual funds either through dividend payments, capital gains, or an increase in asset value.
In terms of monetary value, the U.S. mutual fund market is by far the largest in the world. ICI data shows that as of 2021 end, the U.S. regulated open end funds market was worth more than the markets of Europe and Asia Pacific combined. The U.S. market was worth $34.2 trillion in 2021, with the other two clocking in at $23.3 trillion and $10 trillion, respectively. American registered investment companies had $34.6 trillion in assets in 2021, out of which the majority, or $27 trillion, were held in mutual funds. Within the $27 trillion American mutual fund market, the majority were in long term mutual funds, with equity holdings representing 55% of the market.
Additionally, while retail investor interest in the stock market has made news headlines in the wake of the coronavirus pandemic, this sector was also the dominant player in the mutual fund market. 88% of all mutual fund net assets were held by retail investors in 2021 and this percentage increased to 97% when it came to long term funds. These investors also made vast amounts of money, with the mutual funds distributing a whopping $822 billion in capital gains in 2021 alone. As the stock market rose in 2021, fund flows also grew to mutual funds, with $363 billion in net inflows outpacing the $207 billion in inflows in 2021.
Moving forward from the U.S. to the rest of the world, investment vehicles similar to mutual funds are called open ended investment company (OEIC) or investment company with variable capital (ICVC) in the U.K. These are governed by a board of directors and each OEIC is capable of investing in multiple asset classes. In Western Europe, mutual funds are called société d’investissement à capital variable, or SICAV, for a category of mutual funds that can be redeemed at any point in time.
American mutual fund companies are also among the largest in the world, and if you follow the financial industry, then you’re likely to have come across them. Data from Morningstar shows that as of mid 2022, the largest mutual fund company in the world was The Vanguard Group, Inc., which held an eye popping $6.1 trillion in assets. These were higher than the combined fund assets of the next two largest firms, BlackRock, Inc. (NYSE:BLK) and Fidelity Investments, with the two holding $2.3 trillion and $2.2 trillion in assets, respectively. To understand the scope of these funds, consider the fact that the entire Chinese mutual fund market was estimated to be worth ‘only’ $3.9 trillion in 2022.
Today, we’ll look at some of the best mutual funds right now, with the top picks being Fidelity Advisor Semiconductors Fund Class Z (FIKGX), Fidelity Advisor Semiconductors Fund Class M (FELTX), and Fidelity Advisor Semiconductors Fund (FELIX).
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Our Methodology
We used Yahoo Finance’s mutual fund screener to identify the mutual funds that are rated five stars by Morningstar and consist of stocks or other securities that are traded at any market in the world. The five star rating picks the top 10% of funds based on their risk adjusted rating. Then, the search was further refined by selecting only those funds that have a trailing year to date return higher than 9% as of March 20. This narrowed the list of funds to 240 vehicles, following which the top 53 were selected in terms of their year to date returns. Out of these, the top twenty funds are listed below.
Best Mutual Funds in 2023
20. Nomura Taiwan Growth Fund (0P00006AEG.TW)
Trailing Year to Date Return: 13.29%
Nomura Taiwan Growth Fund (0P00006AEG.TW) is part of the Nomura Asset Management Taiwan family of mutual funds. More than 90% of its holdings are in stocks, with the rest allocated to cash. Within the stock investments, the technology and the consumer cyclical sectors take the lion’s share of the investments, making it one of the best mutual funds in 2023.
19. Baron Partners Fund (BPTIX)
Trailing Year to Date Return: 13.33%
Baron Partners Fund (BPTIX) is a NASDAQ fund registered in New York, New York. It is part of the Baron Capital Group fund family and holds most of its assets in stocks. Almost half of the stock holdings are consumer cyclical, with financial services and real estate forming the next two categories.
18. ProFunds Internet UltraSector Fund (INPSX)
Trailing Year to Date Return: 15.52%
ProFunds Internet UltraSector Fund (INPSX) is part of the ProFunds fund family and is registered in Columbus, Ohio. The fund was set up in 2000 and has $67.7 million in net assets. Roughly 78% of its portfolio is in stocks, with communications and technology accounting for the largest investments. Its 15.52% return makes it one of 2023’s top mutual fund picks.
17. Nomura Taiwan China Focus Fund (0P00006AH3.TW)
Trailing Year to Date Return: 15.65%
Nomura Taiwan China Focus Fund (0P00006AH3.TW) is another stock heavy Taiwan stock exchange fund part of the Nomura Asset Management Taiwan Family. It was set up in 1987 and has a turnover percentage of 159%. Its investments are concentrated primarily in the technology sector.
16. Internet UltraSector ProFund, Investor Class (INPIX)
Trailing Year to Date Return: 15.82%
Internet UltraSector ProFund, Investor Class (INPIX) is a Nasdaq fund registered in Columbus, Ohio. Some of its top holdings are in shares of Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL), and Meta Platforms, Inc. (NASDAQ:META). The fund is also one of the best performing mutual funds in 2023.
15. Nomura Taiwan Superior Equity Fund TWD S (0P0001DFU6.TW)
Trailing Year to Date Return: 16.20%
Nomura Taiwan Superior Equity Fund TWD S (0P0001DFU6.TW) is a Taiwan stock market fund with 88% of stock investments. Some notable firms in which it has invested are Advanced Energy Solution Holding Co., Ltd. (TPE:6781.TW) and Alchip Technologies, Limited (TPE3:661.TW).
14. Nomura Taiwan Superior Equity Fund TWD (0P00006AKS.TW)
Trailing Year to Date Return: 16.47%
Nomura Taiwan Superior Equity Fund TWD (0P00006AKS.TW) is another Nomura Asset Management Taiwan fund. Roughly 71% of its investments are in technology stocks, with 13% of the total assets invested in cash. The fund also has 10% of stock investments in consumer cyclical firms and is one of the top mutual funds in the market.
13. Allianz Global Investors Taiwan Technology Fund (0P00006A9Z.TW)
Trailing Year to Date Return: 16.50%
Allianz Global Investors Taiwan Technology Fund (0P00006A9Z.TW) is a Taiwan stock market fund part of the Allianz Global Investors Taiwan Ltd fund family. It has investments in Accton Technology Corporation (TPE:2345.TW), Alchip Technologies, Limited (TPE3:661.TW), and ASPEED Technology Inc. (TWSE:5274.TWO).
12. Rydex Electronics Fund Class A (RYELX)
Trailing Year to Date Return: 16.86%
Rydex Electronics Fund Class A (RYELX) is a pure play stock market mutual fund with more than 99% of its funds in stocks. It is part of the Rydex Funds family with holdings in Advanced Micro Devices, Inc. (NASDAQ:AMD), Analog Devices, Inc. (NASDAQ:ADI), and NVIDIA Corporation (NASDAQ:NVDA), among others.
11. Rydex Electronics Fund (RYSIX)
Trailing Year to Date Return: 16.92%
Rydex Electronics Fund (RYSIX) is another pureplay stock fund that concentrates exclusively on the technology sector. It was set up in 2005 and has $42.85 million in net assets.
10. ProFunds UltraNASDAQ-100 Fund (UOPSX)
Trailing Year to Date Return: 22.57%
ProFunds UltraNASDAQ-100 Fund (UOPSX) is part of the ProFunds fund family. It has invested 79% of its holdings in stocks, and the remainder in cash and convertibles. The fund is registered in Columbus, Ohio and it has net assets of $476 million. Some of its largest investments are in Apple Inc. (AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).
9. Rydex NASDAQ-100 2x Strategy Fund Class C (RYCCX)
Trailing Year to Date Return: 22.70%
Rydex NASDAQ-100 2x Strategy Fund Class C (RYCCX) is a mutual fund with $480 million in net assets and is part of the Ryder Funds family. It was set up in 2004 and has around 84% of its portfolio invested in stocks.
8. Ultra NASDAQ-100 ProFunds Investor Class (UOPIX)
Trailing Year to Date Return: 22.83%
Ultra NASDAQ-100 ProFunds Investor Class (UOPIX) is a ProFunds fund that was set up in 1997. The fund has $477 million in net assets and investments in Apple Inc. (AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).
7. Rydex Dynamic Fds, Nasdaq – 100 2x Strategy Fd Cl H (RYVYX)
Trailing Year to Date Return: 22.89%
Rydex Dynamic Fds, Nasdaq – 100 2x Strategy Fd Cl H (RYVYX) is a Rydex Funds fund and is registered in Rockville, Maryland. Roughly 84% of its portfolio is invested in stocks and the fund was set up in 2004. Most of its top investments are in large cap American technology companies.
6. Rydex Dynamic Fds, Nasdaq – 100 2x Strategy Fd Cl A (RYVLX)
Trailing Year to Date Return: 22.89%
Rydex Dynamic Fds, Nasdaq – 100 2x Strategy Fd Cl A (RYVLX) is another Rydex Fund. It has $480 million in net assets, was set up in 2004, and has allocated 84% of its portfolio to the stock market. Investments in Apple Inc. (AAPL) and Microsoft Corporation (NASDAQ:MSFT) account for more than one fifth of its stock portfolio.
5. Fidelity Select Semiconductors Portfolio (FSELX)
Trailing Year to Date Return: 27.24%
Fidelity Select Semiconductors Portfolio (FSELX) is part of the Fidelity Investments fund family. It has a whopping $7.75 billion in net assets and focuses primarily on the chip sector. The fund’s largest shareholding is in NVIDIA Corporation (NASDAQ:NVDA) which represents close to a quarter of its stock portfolio.
4. Fidelity Advisor Semiconductors Fund Class M (FELTX)
Trailing Year to Date Return: 27.37%
Fidelity Advisor Semiconductors Fund Class M (FELTX) is another semiconductor fund part of Fidelity Investments that focuses on the semiconductor industry. It has a $902 million net asset value with 97% of the portfolio invested in stocks. NVIDIA Corporation (NASDAQ:NVDA)’s shares account for more than a quarter of the stock investments.
3. Fidelity Advisor Semiconductors Fund (FELAX)
Trailing Year to Date Return: 27.44%
Fidelity Advisor Semiconductors Fund (FELAX) has $902 million in net assets and was set up in 2000. It is registered in Boston, Massachusetts, and like other Fidelity Investments semiconductor funds, has 97% of the portfolio invested in the stock market with NVIDIA Corporation (NASDAQ:NVDA) being the largest stock pick.
2. Fidelity Advisor Semiconductors Fund (FELIX)
Trailing Year to Date Return: 27.5%
Fidelity Advisor Semiconductors Fund (FELIX) is virtually similar to other Fidelity Investments semiconductor mutual funds. It was also set up in 2000 and is a dividend paying mutual fund that is registered in Boston, Massachusetts. Apart from NVIDIA Corporation (NASDAQ:NVDA) some of its other investments are in NXP Semiconductors N.V. (NASDAQ:NXPI) and ON Semiconductor Corporation (NASDAQ:ON).
1. Fidelity Advisor Semiconductors Fund Class Z (FIKGX)
Trailing Year to Date Return: 27.55%
Fidelity Advisor Semiconductors Fund Class Z (FIKGX) is a semiconductor mutual fund that focuses on financial, economic, and industry conditions to choose its investment picks. Its stock market portfolio concentration is similar to other Fidelity semiconductor funds.
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Disclosure: None. 20 Best Mutual Funds in 2023 is originally published on Insider Monkey.
