When searching for a mutual fund, you should look at 3 main criteria. How long has the fund been around is very important. The longer it has been around, the better. You should also be aware of the number of years it has had growth and how many years it has had losses. The third and final thing to consider is the average growth rate for the fund since its inception.
I am going to look at 4 funds that are among the best funds available. While my research was limited to American Funds at www.americanfunds.com, there are many more funds that you could consider.
1) AMCAP FUND (AMCPX). The fund inception was May 1, 1967. As of December 31, 2008 it had 30 years with growth and 11 years with losses. That equates to 73% of the time, this fund has years with growth. The average annual rate of return since inception is 10.50%
2) Washington Mutual Investors Fund (AWSHX). The fund inception was July 31, 1952. As of December 31, 2008 it had 44 years of growth and 12 years with losses. That equates to 78% of the time, this fund has years with growth. The average annual rate of return since inception is 11.50%.
3) American Mutual Fund (AMRMX). The fund inception was February 21, 1950. As of December 31, 2008 it had 47 years with growth and 11 years with losses. That equates to 81% of the time, this fund has years with growth. The average annual rate of return since inception is 11.30%.
4) The Investment Company of America (AIVSX). The fund inception is January 1, 1934. As of December 31, 2008 it had 60 years with growth and 14 years with losses. That equates to 81% of the time, this fund has years with growth. The average annual rate of return since inception is 11.90%.
As you can see, these fund have been around a while and have had success. They have all survived the attack on the World Trade Center, the rise and fall of the dot coms in the 1990’s, the Savings and Loan scandal of the 1980’s, The recession of the late 1970’s, the resignation of President Nixon and the gas crisis of the early 1970’s. The two funds that began in the 1950’s also survived Vietnam, the assassination of President Kennedy and the Korean Conflict. The oldest of these funds not only survived World War II but it began during the Great Depression.
Funds that can survive these kinds of events must have a pretty good idea what they are doing. Not only did these fund survive major events, they have an average annual growth rate of over 10% with growth in over 7 out of 10 years. In my opinion, these are great funds to invest your money.