What mutual fund has the highest return?

According to Fidelity's fund screener, out of 8,595 mutual funds, the highest annualized total return over the last 10 years as of July 31, 2026, was 33.83%, achieved by the Fidelity® Select Semiconductors Portfolio (NASDAQMUTFUND:FSELX).

Are mutual funds worthwhile investments?

In 2026, mutual funds aren't really worthwhile for most investors. Many mutual fund strategies are now available as ETFs with lower expense ratios, fewer taxable capital gains distributions, and the added benefit of intraday liquidity. However, mutual funds remain a common option in workplace 401(k) plans where ETFs are not usually available.

Difference between an ETF and a mutual fund?

ETFs trade on exchanges like stocks, with intraday pricing, while mutual funds are bought and sold at the end-of-day net asset value (NAV). ETFs are also more tax-efficient because their "creation/redemption in-kind" mechanism helps them avoid large capital gains distributions.

What is considered a high price for mutual funds?

A high-cost mutual fund typically has an expense ratio of more than 0.75%, which can significantly eat into long-term returns.

How long should I keep money in a mutual fund?

Mutual funds work best when you take a long-term approach. Because markets move in cycles and many mutual funds are designed to compound gradually, it's common to hold them for several years or even decades. The longer you stay invested, the more time your returns have to smooth out short-term volatility and benefit from compounding.

Do mutual funds pay monthly?

Some mutual funds do pay monthly distributions, but it depends on the type. Income-oriented funds, such as bond funds and certain retirement-income funds, often distribute monthly. Many equity funds, however, pay quarterly, semi-annually, or annually. It's important to check each fund's distribution schedule if monthly income is a priority.

6 Best Mutual Funds to Invest in 2026

Best Mutual Funds to Invest in 2026

By Tony Dong – Updated Aug 17, 2026 at 7:36 PM EST | Fact-checked by Frank Bass

Key Points

Consider mutual funds for diverse, low-cost investment options like Fidelity 500 Index.
Vanguard Wellington offers a mix of stocks and bonds for lower volatility and stable returns.
Assess mutual funds' tax efficiency and turnover rates to minimize capital gains taxes.

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Ticker Information Table
Name and ticker	Current price
Fidelity Concord Street Trust - Fidelity 500 Index Fund (NASDAQMUTFUND:FXAIX)	$270.77
Fidelity Concord Street Trust - Fidelity Total Market Index Fund (NASDAQMUTFUND:FSKAX)	$0.00
Schwab Investments - Schwab 1000 Index Fund (NASDAQMUTFUND:SNXFX)	$0.00
Vanguard STAR Funds - Vanguard Total International Stock ETF (NASDAQMUTFUND:VTIAX)	$0.00
Vanguard International Equity Index Funds - Vanguard Total World Stock ETF (NASDAQMUTFUND:VTWAX)	$0.00
Vanguard Wellington Fund (NASDAQMUTFUND:VWELX)	$0.00

Data as of Aug 18, 2026. Showing 6 of 6 total entries.

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1. Fidelity 500 Index Fund

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NASDAQMUTFUND: FXAIX

Fidelity Concord Street Trust - Fidelity 500 Index Fund

Today's Change

(-0.16%) $-0.43

Current Price

$270.77

Key Data Points

Day's Range

$270.77 - $270.77

52wk Range

$270.77 - $270.77

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The Fidelity 500 Index Fund (FXAIX -0.16%) is one of the best low-cost mutual funds for broad market exposure. Launched in 1988, this fund tracks the S&P 500 index, offering investors a simple, diversified way to invest in America's largest companies.

The fund's extremely low expense ratio of just 0.015% makes it one of the cheapest index funds available. It also has no minimum investment requirement, allowing investors of all levels to participate.

Another reason to like this Fidelity fund is its tax efficiency, thanks to its low 2% turnover rate. This means it rarely buys and sells stocks, which helps reduce taxable capital gains distributions. As of July 31, 2026, the fund has delivered an annualized total return of 15.07% before tax over the last 10 years.

2. Fidelity Total Market Index Fund

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NASDAQMUTFUND: FSKAX

Fidelity Concord Street Trust - Fidelity Total Market Index Fund

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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The Fidelity Total Market Index Fund (FSKAX +0.00%) is a low-cost, highly diversified index fund designed to give investors exposure to the entire U.S. stock market. Launched in 1997, this fund tracks the Dow Jones U.S. Total Stock Market Index, making it a broader alternative to S&P 500-only funds.

This fund also offers a rock-bottom expense ratio of 0.015% and no minimum investment requirement, making it accessible to all investors. It's also tax-efficient, with a low 2% turnover rate, helping minimize taxable capital gains distributions.

The key difference between this fund and the Fidelity S&P 500 fund is that this total market fund includes thousands of mid- and small-cap stocks, providing broader diversification beyond the largest U.S. companies. Despite this broader exposure, it has still delivered a strong 10-year annualized total return of 14.52%.

3. Schwab 1000 Index Fund (SNXFX)

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NASDAQMUTFUND: SNXFX

Schwab Investments - Schwab 1000 Index Fund

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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The Schwab 1000 Index Fund (SNXFX +0.00%) is a straightforward, low-cost mutual fund that provides exposure to the 1,000 largest U.S. stocks, weighted by market capitalization.

With coverage of roughly 90% of the total U.S. stock market, this Schwab fund provides broader diversification than S&P 500-only funds while maintaining the stability of larger, well-established companies.

The fund is also tax-efficient, with a 3.14% turnover rate, meaning minimal capital gains distributions. It comes with a low expense ratio of 0.05% and no minimum investment requirements, making it an affordable option. Over the last 10 years, this mutual fund has delivered a 14.71% annualized total return.

4. Vanguard Total International Stock Index Fund Admiral Shares

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NASDAQMUTFUND: VTIAX

Vanguard STAR Funds - Vanguard Total International Stock ETF

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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For low-cost international diversification, the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX +0.00%) is one of the best options available. This mutual fund tracks the FTSE Global All Cap ex US Index, covering more than 8,500 stocks from both developed and emerging markets.

Like many Vanguard index funds, this one is fairly tax-efficient, with a 4.4% turnover rate that reduces capital gains distributions. It requires a $3,000 minimum investment, which may be an issue for beginner investors. However, it charges a reasonably low expense ratio of 0.09%.

Over the last 10 years, this Vanguard fund has delivered a 9.34% annualized total return -- a lower figure compared to U.S. stocks, as international markets have historically lagged. Still, for those looking to balance their portfolio with global exposure, this fund remains a strong long-term option.

5. Vanguard Total World Stock Index Fund Admiral Shares

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NASDAQMUTFUND: VTWAX

Vanguard International Equity Index Funds - Vanguard Total World Stock ETF

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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For investors looking for one fund that covers the entire global stock market, the Vanguard Total World Stock Index Fund Admiral Shares (VTWAX +0.00%) is an excellent choice. It tracks the FTSE Global All Cap Index, providing exposure to more than 10,000 stocks across the U.S., developed, and emerging markets, all in a single package.

Like many passive index funds, this Vanguard fund is designed to be tax-efficient, with a low 3.4% turnover rate, which helps minimize taxable distributions. The expense ratio of just 0.09% also keeps costs low, making it one of the most affordable global stock funds available.

Over the past five years, this index fund has delivered an annualized return of 10.60%, benefiting from strong U.S. market performance while still providing broad international diversification. However, like most Vanguard Admiral Shares funds, it requires a $3,000 minimum investment.

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6. Vanguard Wellington Fund Investor Shares

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NASDAQMUTFUND: VWELX

Vanguard Wellington Fund

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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The Vanguard Wellington Fund Investor Shares (VWELX +0.00%) is one of the most resilient, time-tested mutual funds available. Launched in 1929, it has navigated almost a century of market cycles, delivering an 8.41% annualized total return since inception.

This fund has survived and thrived through major financial crises, including the Great Depression, Black Monday in 1987, the dot-com bubble, the Great Recession, and the COVID-19 market crash.

Unlike traditional index funds, this Vanguard fund is actively managed and does not track a benchmark. Instead, it holds a carefully selected portfolio: two-thirds are high-quality dividend-paying stocks screened for value and stability, and one-third are investment-grade bonds, providing a balance of growth and income.

This allocation helps the fund weather market downturns better than pure stock funds, making it a strong choice for investors seeking lower volatility without sacrificing returns.

That said, this mutual fund isn't the most tax-efficient option due to its mix of stocks and bonds, which, along with a higher turnover rate from the active management, can generate taxable distributions. And although its 0.24% expense ratio is reasonable for an actively managed fund, it's higher than that of low-cost index funds.

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Types of mutual funds

Equity funds: Invest primarily in stocks with the goal of long-term growth. These carry a higher risk but also a higher return potential.
Fixed-income funds: Focus on government, corporate, or municipal bonds. They aim to generate a steady income with lower volatility than stock funds.
Balanced funds: Combine stocks and bonds in one portfolio in various proportions to offer both growth and stability.
Money market funds: Invest in short-term, high-quality debt instruments. These aim to preserve capital with a fixed NAV per share of $1 and pay modest interest.
Alternative funds: Use non-traditional strategies or invest in assets like commodities, real estate, or hedge fund-style approaches to diversify beyond stocks and bonds.

Benefits and risks of mutual funds

Potential benefits of mutual funds include:

Access to professional portfolio management without the need to pick individual securities.
Built-in diversification, spreading risk across many holdings in one fund
Automatic dividend reinvestment to compound returns over time
Lower trading costs for long-term investors, since there's no need to buy or sell frequently
Wide range of investment strategies, from conservative bond funds to aggressive stock funds

Potential risks of mutual funds include:

Higher expense ratios on average compared to ETFs, which can erode total returns over time
Less tax efficiency because capital gains are distributed annually, even if you didn't personally sell shares
Limited trading flexibility since mutual funds are priced only once per day after markets close, whereas ETFs trade intraday
Less variety than ETFs, especially when it comes to sector-specific, leveraged/inverse, and thematic strategies

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Methodology: How these mutual funds were chosen

We focused on mutual funds that are practical for long-term retail investors to own. Cost was a major consideration, including both low expense ratios and minimal investment minimums. We also favored funds with low portfolio turnover, which can reduce trading costs and improve tax efficiency by limiting the realization and distribution of capital gains.

Finally, we prioritized mutual funds with long track records and substantial asset bases. An established history provides more information about how a fund has performed across different market environments, while a large asset base can indicate sustained investor demand and reduce the risk of a fund being merged or closed.

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Should you invest in mutual funds?

Whether you should invest in mutual funds depends on the options available to you. If you're investing through a workplace 401(k) plan, mutual funds might be your only choice since many employer-sponsored plans don't offer ETFs. If that's the case, mutual funds can be a solid option for building long-term wealth.

If you're investing in a self-directed brokerage account, there's usually no compelling reason to choose mutual funds over ETFs, unless there's a specific strategy that appeals to you or you find a fund with ultra-low fees, like Fidelity's zero-cost index funds.

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Investing in mutual funds FAQ

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Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Best Mutual Funds to Invest in 2026