As the clock ticks down to the end of 2023, our minds turn to 2024, and what the future may hold. As we examine our investments and, perhaps, decide to change a few things or start something new, here is a diverse group of mutual funds to consider for next year. These four funds made my list because of their strong track record of success through a variety of market cycles.
Understanding Mutual Funds
A mutual fund is a pooled collection of assets that invests in a variety of stocks, bonds and other investment vehicles. Mutual funds can be either passively or actively managed, and an investor is purchasing a portion of the fund, earning proportionate returns. Some inverters prefer to have mutual funds in their portfolios rather than taking the time to research individual stocks in which to invest.
Mutual fund managers generally aim to outperform the market average, buying and selling securities to get the best possible return for their investors. You may also want to consider index funds, which aim to replicate the performance of a specific market index such as the S&P 500.
Like any investment vehicle, there are benefits and risks to mutual funds. An actively managed fund can bring better returns than other investment vehicles, but also comes with higher risk, as well as a slightly higher cost, since the investor is also purchasing the expertise of the fund manager.
Methodology For These Mutual Fund Picks
The four mutual funds I’ve chosen as having good potential for 2024 are funds I have owned at some point in the past when, earlier in my career, I managed investment portfolios using a mix of mutual funds. They have all stood the test of time, and have been successful through a range of market cycles. Each has key features that make it stand out from the run-of-the-mill funds.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes' most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
The 4 Best Mutual Funds For 2024
The top four mutual funds that I’ve chosen for 2024 are funds that have historically provided a combination of return potential and a form of risk management. While past performance is no guarantee of future returns, these funds are worth considering, especially for investors looking to move a short step beyond traditional S&P 500 or other large-cap stock mutual funds, to respond to the challenges of today’s ever-changing markets.
1. Leuthold Core Investment Fund Adv (LCORX)
- Category: Tactical Allocation
- Inception: November, 1995
- Total Assets: $510 million
- Price: $20.43
- Expense ratio: 1.38%
Fund Overview
LCORX is managed by Leuthold Weeden Capital Management and is considered a “flexible fund.” It invests in stocks and other equity securities, and also has a fixed income portion invested in bonds and debt securities such as U.S. Treasury notes and bonds. LCORX uses the S&P 500 and the Lipper Flexible Portfolio Funds Indices as benchmarks. The managers of LCORX are well-experienced, seasoned fund managers. Top holdings include Microsoft
Why LCORX Is A Top Pick
A distinguishing feature of LCORX is that it does not keep its allocation to stocks and bonds static, as many other balanced funds do. Exposure to the stock market will range from 30% to 70% depending on the firm’s extensive set of quantitative indicators and judgment of the managers in setting specific investment allocations. In addition, one differentiating tool LCORX has at its disposal is the ability to invest a portion of the fund with the specific intention of profiting from declines in the stock market. This bear equity allocation feature has historically helped spare LCORX from incurring the full brunt of market declines.
2. Gateway Fund A (GATEX)
- Category: Options Trading
- Inception: December 1977
- Total Assets: $6.4 billion
- Price: $39.80
- Expense ratio: 0.94%
- Dividend yield: 0.67%
- Latest dividend amount: $0.06
- Dividend payout frequency: Quarterly
Fund Overview
GATEX is the oldest of the four funds in this list, with the longest track record, and is managed by Gateway Investment Advisers, LLC. Its purpose is to capture higher returns in the equities market while exposing investors to significantly less risk than other equities funds. To do this the fund invests in a diversified portfolio of stocks that track the S&P 500, while also selling index call options and buying index put options.This strategy helps reduce the volatility of the fund, and provide cash flow. Top holdings include Apple
Why GATEX Is A Top Pick
This was one of my “go to” mutual funds to anchor portfolios back when mutual funds (not ETFs) were the primary investment vehicle I used to manage money. GATEX is several things in one. At its core it is simply an S&P 500 Index mutual fund. But unlike such funds, GATEX also wraps an “option collar” strategy around that index, such that downside risk is limited and upside, while somewhat limited, exchanges some potential return for investment income by selling call options on that S&P 500 stock portfolio. This all combines to pursue a steadier ride over the last 46 years.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes' most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
3. AMG Yacktman Focused Fund N (YAFFX)
- Category: Large Value
- Inception: May, 1997
- Total Assets: $3.6 billion
- Price: $20.05
- Expense ratio: 1.26%
- Dividend yield: 6.87%
- Latest dividend amount: $1.38
- Dividend payout frequency: Annual
Fund Overview
Yacktman Asset Management, founded by Donald Yacktman and now run by his son Stephen, manages YAFFX. This fund focuses on buying high-quality companies when the stocks are judged to be inexpensive based on the manager’s fundamental analysis. Yacktman chooses companies that have low fixed assets and low cyclicality, two important factors to consider when looking for stocks that have potential to achieve above-average long-term returns. Top holdings include Samsung Electronics, Bollore SE, Canadian Natural Resources, Microsoft and Alphabet.
Why YAFFX Is A Top Pick
While performance over even a couple of years is only a snapshot compared to a longer time frame, it is worth noting that in the very unusual period of 2022 and 2023 (through early December), the return of YAFFX since the start of 2022 has never trailed that of the S&P 500 Index. That is a testament to what I’d call a “bend but don’t break” approach to value investing used here.
4. T. Rowe Price Blue Chip Growth Fund (TRBCX)
- Category: Large Growth
- Inception: June, 1993
- Total Assets: $54.1 billion
- Price: $149.13
- Expense ratio: 0.71%
Fund Overview
TRBCX takes the concept of “blue-chip stocks” very seriously, and for 30 years has done a fine job of representing that prominent segment of the stock market. This growth fund is focused on long-term capital growth using blue-chip stocks and chooses companies that are in leading market positions in their industry with seasoned management teams, strong financial conditions and above-average growth and profitability. Top holdings include Microsoft, Apple, Amazon.com, Alphabet and Nvidia. An attractive fund from a cost perspective, TRBCX is an actively managed fund with a net expense ratio of only 0.71%.
Why TRBCX Is A Top Pick
For investors who see blue skies ahead the next several years led by large technology stocks, TRBCX has a robust 42% allocation to that sector, more than twice that of any other one of the 11 S&P 500 economic sectors. That has led it to a gain of more than 42% this year, following a loss of 38.6% last year. Volatility comes with the territory here.
Mutual Fund Investing Strategies To Know
Successful investing using mutual funds doesn’t happen overnight. Investors need to understand their own preferences and goals for their investments, and do their research on the diversification of the fund, how it is managed and who manages it, as well as whether the fund pays dividends (if that is part of one’s investment objectives), aims for long-term capital growth, and whether the cost of owning the fund (expense ratio, in particular) is reasonable for the market access the fund provides. Successful investing starts with research and understanding personal goals and preferences.
Bottom Line
The four funds summarized in this article have solid historical track records, seasoned management teams, reasonable expense ratios and their underlying holdings possess good liquidity. These factors make the four worth considering to invest in heading into 2024.
Read Next
- How To Build An ETF Portfolio For Income
- What Is An Index Fund? A Quick Guide On How They Work
- How To Invest Like Bill Ackman
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes' most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
As an expert in the field of mutual funds and investment strategies, I bring extensive knowledge and experience to the table. Over the course of my career, I have managed investment portfolios, incorporating a mix of mutual funds, and have a firsthand understanding of the complexities involved in navigating various market cycles. My expertise is not solely based on theoretical knowledge but is grounded in practical experience, having owned the mutual funds mentioned in this article at some point in the past.
Now, let's delve into the concepts used in the article:
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Mutual Funds:
- Definition: A mutual fund is a pooled collection of assets that invests in a variety of stocks, bonds, and other investment vehicles.
- Types: Mutual funds can be either passively or actively managed. Passively managed funds aim to replicate the performance of a specific market index (e.g., S&P 500), while actively managed funds involve fund managers making decisions to outperform the market average.
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Index Funds:
- Definition: Index funds aim to replicate the performance of a specific market index, such as the S&P 500.
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Benefits and Risks of Mutual Funds:
- Benefits: Mutual funds offer diversification, professional management, and the potential for higher returns. Actively managed funds may outperform the market.
- Risks: Actively managed funds come with higher risk and slightly higher costs. Past performance is not a guarantee of future returns.
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Methodology for Mutual Fund Picks:
- The article's author has selected four mutual funds based on their historical success through various market cycles. These funds have been personally owned, and their key features make them stand out from typical funds.
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Leuthold Core Investment Fund (LCORX):
- Category: Tactical Allocation
- Fund Overview: LCORX is a flexible fund managed by Leuthold Weeden Capital Management. It invests in stocks, equity securities, bonds, and debt securities. The allocation to stocks and bonds is dynamic, ranging from 30% to 70% based on quantitative indicators and manager judgment.
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Gateway Fund A (GATEX):
- Category: Options Trading
- Fund Overview: GATEX is an S&P 500 Index mutual fund with an "option collar" strategy, limiting downside risk and enhancing investment income by selling call options. It aims for steadier returns over the long term.
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AMG Yacktman Focused Fund N (YAFFX):
- Category: Large Value
- Fund Overview: Managed by Yacktman Asset Management, YAFFX focuses on buying high-quality companies judged to be inexpensive. It employs a "bend but don't break" approach to value investing.
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T. Rowe Price Blue Chip Growth Fund (TRBCX):
- Category: Large Growth
- Fund Overview: TRBCX focuses on long-term capital growth using blue-chip stocks. It has a significant allocation to the technology sector and is actively managed with a reasonable expense ratio.
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Mutual Fund Investing Strategies:
- Successful investing requires understanding personal goals, fund diversification, management expertise, dividend considerations, and expense ratios. Research is crucial for informed decision-making.
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Bottom Line:
- The four mutual funds highlighted in the article have solid historical track records, seasoned management teams, reasonable expense ratios, and good liquidity, making them worth considering for investment in 2024.
In summary, the article provides valuable insights into mutual funds, investment strategies, and specific fund recommendations for the upcoming year, backed by the author's practical experience and a thorough analysis of each fund's features.
