3 Top Mutual Funds to Invest in Right Now

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  • Mutual funds typically appeal to buy-and-hold investors looking for dividend income, growth as well as value.
  • Vanguard Consumer Staples Index Fund Class Admiral Shares (VCSAX): The fund includes stocks of companies that provide direct-to-consumer products that are considered essential to daily life.
  • American Funds American Balanced Fund (ABALX): The fund invests between 50% and 75% in equities, with flexible exposure to growth-oriented and dividend-paying stocks
  • T. Rowe Price U.S. Equity Research (PRCOX): Provides long-term growth by investing in large-cap U.S. stocks.

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Mutual funds are the most popular investment vehicle among buy-and-hold investors. Of course, given the current volatility, there can be no guarantee as to how a fund may perform for the rest of the year. However, for most individuals, the investment horizon is not months, but multiple years or even decades.

Recent metrics suggest nearly half of all American households own mutual funds. Moreover, the U.S. household wealth invested in mutual funds is about twice the amount of those in bank accounts. Put another way, total net assets under management of U.S. mutual funds are constantly rising.

When deciding on which mutual funds to buy, individuals should revisit their investment objectives as well as risk/return profiles. Then they would need to decide if they are looking for income, growth, or value-oriented funds.

Paying attention to fund managers, past returns, as well as annual expense ratios are also important factors to consider. With that information, here are three robust mutual funds to buy that deserve your attention.

VCSAX Vanguard Consumer Staples Index Fund $96.47
ABALX American Funds American Balanced Fund $29.70
PRCOX T. Rowe Price U.S. Equity Research Fund $37.76

Top Mutual Funds: Vanguard Consumer Staples Index Fund (VCSAX)

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Our first mutual fund, the Vanguard Consumer Staples Index Fund (NASDAQ:VCSAX), is a low-cost index fund that provides “exposure to the consumer staples sector of the U.S. equity market….” The fund was first launched in January 2004.

VCSAX, which tracks the MSCI US IMI Consumer Staples 25/50 Index, has 99 holdings. With regards to sub-sectors, household products lead with 20.30%. Next come soft drinks at 19.50%, hypermarkets & super centers at 16.90% and packaged foods & meats at 16.60%.

The top 10 stocks in the portfolio account for more than 60% of net assets of $8.1 billion. Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), Costco (NASDAQ:COST), PepsiCo (NASDAQ:PEP) and Walmart (NYSE:WMT) are among the most prominent holdings.

As inflation soars, consumer products and companies that manufacture or distribute them have been in the limelight. VCSAX has appreciated more than 5% in the past 12 months but has lost more than 2% year-to-date (YTD). At present, the fund is trading at 24.9 times trailing earnings and 5.0 times book value.

American Funds American Balanced Fund (ABALX)

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Our second mutual fund, the American Funds American Balanced Fund (NASDAQ:ABALX), gives access in a broad range of securities, including common stocks and investment-grade bonds. The fund invests between 50%-75% of assets of $204 million in equities. Among those shares, growth-oriented and dividend-paying stocks are at the forefront.

ABALX, which tracks the 60%/40% S&P 500 Index/Bloomberg U.S. Aggregate Index, currently has 720 holdings. In terms of sectoral allocations, we see information technology (IT) leading at 14.2%, followed by healthcare at 9.6%, financials at 7.3% and consumer discretionary at 5.7%.

Around a fifth of the portfolio is in the leading 10 stocks. They include Microsoft (NASDAQ:MSFT), Broadcom (NASDAQ:AVGO), UnitedHealth Group (NYSE:UNH), Philip Morris (NYSE:PM) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL).

ABALX is currently hovering close to a 52-week low and has declined more than 11% YTD. The fund is trading at 16.01 times trailing earnings and 3.2 times book value. Finally, the expense ratio stands at 0.56%.

Top Mutual Funds: T. Rowe Price U.S. Equity Research (PRCOX)

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Our last mutual fund, the T. Rowe Price U.S. Equity Research (NASDAQ:PRCOX), seeks long-term capital growth by investing primarily in stocks within different industries based on weightings similar to the S&P 500 index.

But unlike the S&P 500, PRCOX also provides exposure to smaller cap and foreign stocks. The mutual fund, which was first listed in November 1994, has 247 holdings.

More than a quarter of the stocks come from the IT sector. They are followed by health care at 14.56%, consumer discretionary at 12.1% and financials at 10.88%. Meanwhile, the top 10 stocks comprise a third of net assets of $12 billion.

Leading holdings in the portfolio include Apple (NASDAQ:AAPL), Microsoft, Alphabet, Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA).

PRCOX is currently at a 52-week low and has declined 16.5% YTD. Finally, the fund is trading at 25.2 times trailing earnings and 4 times book value.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.