For clients who have not jumped on the passive investment bandwagon but still want mutual funds on the cheap, there are some strong options to consider – in a bull-market at least.
With these parameters in mind – active management, low fees and strong performance – we started looking at the possibilities. We specifically looked at active funds with at least $500 million in assets and expense ratios of 25 basis points or less (we could have screened for 20 basis points because in the end, our most expensive fund on this list was just 19 basis points.).
Then, we ranked them by their year-to-date performance. The conclusion? It paid in 2017 to be a penny-pinching retiree. Why? Because 17 of the top 20 funds are target-date funds. Whether your client is planning to retire in 2035 or 2060, these funds have posted returns well into the double-digits year to date (the average is 20%) while costing an average of 15 basis points.
Reversion to the mean is a powerful force, though, as the three-year returns of these 20 funds averaged a more realistic 8.8%.
Scroll through to see the 20 top-performing active funds this year to date with the lowest expense ratios. All data from Morningstar.