4 Mutual Funds to Build Up a Shining Retirement Portfolio

Zacks Equity Research
·5 min read

Retirement generally presents one with fundamental investment challenges. So with age, people look for more secure investment vehicles without high risk but stable returns. In fact, investors planning for retirement shift focus from speculative mutual funds that bear high risk but promise good returns.

Now, with the coronavirus pandemic rattling the financial market and putting investors into paranoia, people planning to build a retirement portfolio have enough options. After all, the pandemic-led volatility has pushed stocks to all-time lows, which mutual funds for a retirement portfolio economical.

This pandemic-led market downturn offers ample opportunities for millennials to buy in the dip. This generation can fight market volatility better than investors closer to retirement and build a better retirement portfolio.

Investors looking forward to building up retirement wealth should keep in mind certain criteria while investing. First, one has to opt for age-right investments. Millennials, who have time on their side, can opt for long-term investments. Senior investors must have a short-timeframe based conservative approach.

Additionally, retirement portfolios should contain bond funds that offer income and stability, such as U.S. government bond funds or investment-grade corporate bond funds which are not tagged high yield or junk. Investors can also look out for funds with tax-free income.

Lastly, investors need to allocate a portion of their assets in investment that can continue to grow and protect against inflation. Mutual funds with well-known, dividend-paying stocks are winners in this scenario. One should consider large-cap growth and mid-cap growth funds with a low minimum initial requirement.

Additionally, a low expense ratio should also benefit investors as while seeking capital growth, paying a hefty amount as the fund’s fee isn’t feasible.

4 Best Retirement Funds to Buy Now

Given the current scenario, we have highlighted four mutual funds focused on retirement benefits, having a Zacks Mutual Fund Rank #1 (Strong Buy) and encouraging returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

DWS Global Income Builder Fund - Class A KTRAX aims to maximize income while exploring the scope for capital appreciation. The fund invests at least 40% of its net assets in foreign securities, foreign currencies and other foreign investments and at least 25% of net assets in fixed income senior securities. The fund managers can invest in securities of any size, sector, maturity, duration or credit quality, which may include high-yield debt securities from any country.

This Zacks Allocation Balanced product has a history of positive total returns for more than 10 years. Specifically, the fund has returned nearly 4% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

KTRAX an annual expense ratio of 0.92%, which is below the category average of 1.00% and the minimum initial investment is $1,000.

T. Rowe Price Spectrum Conservative Allocation Fund PRSIX focuses on total returns over time and emphasizes on income and capital growth. The fund’s diverse portfolio may contain approximately 40% stocks, along with 55% bonds, money market securities and cash reserves. It can also have 5% of alternative investments, which may contain hedge funds.

This Zacks Allocation Balanced product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 5.3% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRSIX an annual expense ratio of 0.62%, which is below the category average of 0.79% and the minimum initial investment is $2,500.

Payson Total Return Fund PBFDX aims for both, high current income and capital appreciation. The fund invests in common stocks and convertible securities of large and mid-cap domestic companies.

This Zacks Allocation Balanced product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 13.3% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PBFDX an annual expense ratio of 0.89%, which is below the category average of 0.92% and the minimum initial investment is $2,000.

Dodge & Cox Balanced Fund DODBX aims for regular income along with conservation of principal and opportunity for long-term growth of principal and income. The fund manager creates a diversified portfolio consisting of both equity securities and debt securities, which under normal circumstances has no less than 25% and no more than 75% of DODBX’s total assets invested in equity securities.

This Zacks Allocation Balanced product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 3.6% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

DODBX an annual expense ratio of 0.53%, which is below the category average of 0.83% and the minimum initial investment is $2,500.

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