Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Yesterday, we took a look at five of the 10 most popular mutual funds in 401(k) plans across the country, based on a recent ranking from retirement plan rating firm BrightScope. Since these funds are raking in billions of retirement dollars, it makes sense to take a closer look to see if these funds are actually good options for investors or not. Today we finish our coverage by examining the five most popular funds in 401(k) plans. Read on, because there's a good chance one or more of these funds are in your retirement plan right now.
(5) Vanguard 500 Index (VFINX)
This fund goes way back -- to 1976, to be exact. One of the very first index funds in existence, the Vanguard 500 Index has a long history of tracking the market and for many years stood as the champion of index funds. While there are now a handful of cheaper index funds and exchange-traded funds available, this fund is still among the least expensive equity funds around, with a 0.l8% price tag.
Even by just aiming to track the S&P 500 Index, this fund has beaten two-thirds of all large-blend funds in the past 15 years, so that should tell you something about how poorly active managers have fared over the long haul! This fund remains an excellent choice for passive exposure to the domestic stock market and is suitable for all investors.
(4) State Street Global Advisors S&P 500 Index (SVSPX)
Yet another S&P 500 tracker, this index also comes with a 0.18% price of admission. There's not much difference among S&P 500 index funds, so go with the cheapest fund that you have access to. If this fund is in your retirement plan, it would make a solid option for passive investors.
Of course, you'll likely want to supplement your exposure here with some dedicated small-cap exposure, because market capitalization-weighted index funds like these place a heavy emphasis on the largest of large caps. But it's hard to go wrong with this fund choice.
(3) American Funds EuroPacific Growth (AEPGX)
This popular fund now boasts more than $100 billion in total assets, making it the fourth-largest mutual fund in existence, according to Morningstar. The team of eight portfolio managers here each run their portion of the portfolio according to their own investment approach.
Here you'll find exposure to developed-market stocks like Swiss companies Novartis (NYSE: NVS ) and UBS (NYSE: UBS ) alongside emerging names like Mexico's America Movil (NYSE: AMX ) and Israeli Teva Pharmaceutical (Nasdaq: TEVA ) . Each of these names meets the fund's guiding criteria for long-term, buy-and-hold investments with meaningful growth prospects. Over the past decade and a half, EuroPacific Growth has outranked 95% of all foreign large-blend funds with a 9% annualized return. This fund is a great, broad-based foreign option for investors of all risk tolerances.
(2) PIMCO Total Return (PTTAX)
With the massive investor movement into bonds in recent years, it shouldn't be surprising that PIMCO Total Return has claimed the No. 2 spot among most popular funds in 401(k) plans. This fund has drawn billions of dollars of inflows in recent years and is now the single largest mutual fund in existence. Manager Bill Gross is one of the bond world's most prescient gurus, helping this fund to sidestep the worst of the financial crisis.
The fund has outranked 96% of its peers in the past 15 years and has even beaten the S&P 500 Index over that time. Total Return invests in a mix of government, mortgage, corporate, and foreign bonds, so investors have most of their bond bases covered with this fund.
While this truly is one of the best bond funds around and would make a fine core holding for any portfolio, investors should be cautioned that bond returns won't always look this good and that there is a fair amount of risk in the bond market right now. But long-term bond investors should find a lot to like here.
(1) American Funds Growth Fund of America (AGTHX)
Nabbing the No. 1 spot among 401(k) plan favorites is this $150 billion giant. While its girth hasn't slowed the fund down yet, there is a danger that its increasing asset load could hinder it down the road.
So far, however, it shows few signs of taking a break. The fund ranks in the top 5% of all large-growth funds in the past decade and a half, with a 9.1% annualized return. Fast-growing names are on management's radar, so you'll find popular big-name tech plays Microsoft (Nasdaq: MSFT ) and Cisco Systems (Nasdaq: CSCO ) here, two growth-oriented names that are selling at reasonable valuations as well. Industrials and materials stocks like Barrick Gold (NYSE: ABX ) also soak up roughly 14% of fund assets, so you're not just getting the typical tech-loaded portfolio here. While investors may need to keep an eye on fund assets in the future, right now this fund is a first-rate choice for growth-oriented domestic stock exposure.
Ultimately, the good news is that almost all of these top 10 funds are reasonable choices for most 401(k) investors. None of them are terrible performers or carry excessive fees, and almost all of them feature long-tenured managers or teams. That's a good thing for investors who are likely to find one or more of these funds in their own retirement plan.