Top 10 Mutual Funds To Invest In For The Year 2021

Last year was a difficult year for investments and mutual funds weren't any different. Mutual fund managers experienced a turbulent time trying to steer their funds through the economic rollercoaster ignited by the pandemic. Thankfully, a few funds successfully scaled through as a result of the impeccable stock-picking skills of their managers. 

Mutual funds are basically financial tools that consist of pools of money from different investors, to be invested in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and set to produce income for the investors. 

Mutual funds give individual or small investors access to professionally managed portfolios, making each shareholder participate proportionally in the gains or losses of the fund. They're currently one of the most popular investment choices for Americans as they come with numerous advantages, some of which include risk reduction, convenience, affordable pricing, and advanced portfolio management. 

In 2020, there were 7,636 mutual funds in the United States, making it difficult for more people to select the one that's best for their portfolio. 

Below is a list of ten mutual funds to invest in 2021 we've compiled, taking into consideration their return, turnover rates, and overall performance.

10. JPMorgan Small Cap Value Fund Class R5 (NASDAQ: JSVRX)

Year-to-Date Return: 28.05%

This is a New York-based mutual fund that invests at least 80% of net assets into stocks present on the Russell 2000 Value Index. The fund focuses primarily on common stocks and real estate investment trusts and also uses a value-oriented approach to investment. 

This fund has over $1.44 billion in net assets under management with a holdings turnover of 42%. The expense ratio for the fund is 0.87%.

One of the fund's major holdings is lifestyle retail company, Abercrombie and Fitch. (NASDAQ: ANF) 

JPMorgan Small Cap Value Fund Class R5 has invested a total of 0.82% of assets in Abercrombie & Fitch.

9. Columbia Small Cap Value Fund I Institutional 2 Class (NASDAQ: CUURX)

Year-to-Date Return: 28.60%

Columbia Small Cap Value Fund I Institutional 2 Clas is a mutual fund based in Boston, that invests a minimum of 80% of net assets in stocks present on the Russell 2000 Value Index. This fund also has a provision of investing a maximum of 20% of total assets in stocks that trade outside the United States. 

With over $1 billion in net assets under management with a holdings turnover of 60%, the expense ratio for this fund is 0.93%.

One of the fund's major holdings of the fund is California-based consulting firm, Korn Ferry (NYSE: KFY), which operates in more than 50 countries across the world. So far, 16 hedge funds around the world hold stakes in Korn Ferry which are worth $226 million, making it a top stock option for mutual funds.

Columbia Small Cap Value Fund I Institutional 2 Class has invested a total of 1% of its assets in Korn Ferry.

8. AB Small Cap Value Portfolio Advisor Class (NASDAQ: SCYVX)

Year-to-Date Return: 32.30%

California-based mutual fund, AB Small Cap Value Portfolio Advisor Class, is eighth on our list. According to the Russell 2000 Value Index, this firm invests at least 80% of net assets in firms with small market capitalizations. 

With over $608 million in net assets under management with a holdings turnover of 48%, the expense ratio for the fund is 0.96%.

A flagship holding of the fund is Terex Corporation (NYSE: TEX), a heavy machinery company based in Connecticut, in which AB Small Cap Value Portfolio Advisor Class has invested 1.46% of its net assets. Terex Corporation has about 31 hedge funds investing in it, all of their investments making a total of $501 million.

7. DFA U.S. Targeted Value Portfolio Institutional Class(NASDAQ: DFFVX)

Year-to-Date Return: 32.33%

DFA U.S. Targeted Value Portfolio Institutional Class is a California-based mutual fund that invests at least 80% of net assets in small-cap stocks which the fund is convinced are undervalued and hold upside potential. 

This fund has over $12.8 billion in net assets under management with a holdings turnover of about 20%, with an expense ratio of 0.33%.

A major holding of the fund is Darling Ingredients Inc. (NYSE: DAR), a Texas-based packaged food company with which Targeted Value Portfolio Institutional Class has invested 0.82% of its assets. This makes 33 funds investing in the company, with a total investment of $756 million.

6. Hartford Small Cap Value Fund Class R5(NASDAQ: HSMTX)

Year-to-Date Return: 32.49%

Hartford-based mutual fund, Hartford Small Cap Value Fund Class R5 invests at least 80% of its net assets in stocks that have small market capitalizations. While this fund sometimes focuses on one sector of the market, it largely diversifies its portfolio across different segments. 

Hartford Small Cap Value Fund Class R5 has over $140 million in net assets under management with a holdings turnover of 62%, and an expense ratio for the fund is 0.90%.

A top holding of the fund is Deluxe Corp (NYSE: DLX), a financial services company based in Minnesota. Hartford Small Cap Value Fund Class R5 has invested 2.05% of assets in Deluxe Corp, joining 11 other funds to hold stakes worth $55 million.

5. American Century Small Cap Value Fund R6 Class (NASDAQ: ASVDX)

Year-to-Date Return: 32.65%

American Century Small Cap Value Fund R6 Class is a Kansas City-based mutual fund that invests about 80% of its net assets in firms with small market capitalizations.

The fund currently has over $5 billion in net assets under its management with a holdings turnover of 71%, and an expense ratio of 0.90%.

A major holding of the fund is Coherent, Inc. (NASDAQ: COHR), another California-based technical equipment company, where it has invested 2.63% of its total assets. So far, 41 funds hold stakes in Coherent Inc, with a combined value of $1.4 billion.

4. MassMutual Small Company Value Fund Class I (NASDAQ: MSVZX)

Year-to-Date Return: 32.86%

Springfield-based MassMutual Small Company Value Fund Class invests about 80% of its assets in small capitalization firms as represented in the Russell 2000 Index. With over $228 million in net assets with a holdings turnover of 57%, this fund ranks fourth on our list. It has an expense ratio of 1%.

A top holding of the fund is BankUnited, Inc. (NYSE: BKU), a financial services company based in Florida. MassMutual Small Company Value Fund Class I has so far invested 1.57% of assets in this company, BankUnited Inc, joining 9 other funds with total stakes worth $135 million.

3. Bridgeway Ultra-Small Company Market Fund (NASDAQ: BRSIX)

Year-to-Date Return: 35.13%

Bridgeway Ultra-Small Company Market Fund is a Texas-based mutual fund that focuses on Investing about 80% of its net assets in companies with ultra-small market capitalizations across the US. 

With over $370 million in net assets under management with a holdings turnover of 51%, this fund ranks third on our list. The expense ratio for this fund is 0.94%.

Bridgeway Ultra-Small Company Market Fund has invested about 1.46% of its total assets into Aclaris Therapeutics, a biotech company based in Pennsylvania. This makes 30 funds investing in the company, all of which hold stakes worth a combined $655 million.

2. DFA U.S. Small Cap Value Portfolio Institutional Class (NASDAQ: DFSVX)

Year-to-Date Return: 35.35%

DFA U.S. Small Cap Value Portfolio Institutional Class is a California-based mutual fund that invests about 80% of its total assets in companies with small market capitalizations across the US. 

This fund has over $15 billion in net assets with an 18% holdings turnover. The expense ratio is at 0.39%.

Its major holding is with Element Solutions Inc (NYSE: ESI), a finance Florida-based financial specialty chemicals company based in Florida, where it has invested 0.89% of its assets.

So far, 33 funds have invested in Element Solutions, with stakes worth a combined $624 million.

1. Bridgeway Small Cap Value Fund (NASDAQ: BRSVX)

Year-to-Date Return: 37.80%

Texas-based mutual fund, Bridgeway Small Cap Value Fund, is ranked number one on our list. This fund invests at least 80% of its net assets in companies with small market capitalizations in the US market. 

The fund has over $253 million in net assets under management with a holdings turnover of 87%, as well as an expense ratio of 0.94%.

Bridgeway's major holding in Veritiv Corporation (NYSE: VRTV), a Georgia-based industrial conglomerate. It has 1.64% of assets invested in this Corporation, joining 12 other funds with a combined stake worth $186 million.

Meaning of terms used

1. The Expense Ratio: 

The expense ratio is the total percentage of fund assets used to service expenses administrative, management, advertising, etc.

An expense ratio of 1% per annum implies that 1% of the fund's total assets will be used to cover expenses every year. 

  2. Turnover Rate:

Turnover rate is the percentage of a fund's holdings that have changed over the past year. This is usually calculated by dividing its total sales or purchases (excluding cash), whichever is less, by its average monthly assets during the year. To put this into context, a fund that trades 50% of its portfolio each year holds a stock for two years, on average, while a fund that trades 100% of its portfolio holds a stock for a year.

3. Year To Date Return

The year-to-date return is the amount of profit (or loss) realized by an investment from its first trading day of the current calendar year.