A single mutual fund can give you exposure to hundreds or even thousands of stocks at once. For most new investors, that kind of built-in diversification at a low cost is hard to beat on your own. The challenge is picking the right fund from the thousands available.
This list focuses on funds with strong track records, low expenses, and clear use cases. Whether you are investing through a Fidelity or Vanguard account, there is likely a fund here that fits your goals. If you are still deciding between funds and individual ETFs, the ETF vs mutual fund comparison is a useful starting point before diving into specific picks.
Our Top Picks
Here are six mutual funds worth considering in 2026, across both index and actively managed categories.
1. FXAIX: Fidelity 500 Index Fund
Expense ratio: 0.015% | Minimum investment: None
FXAIX tracks the S&P 500 and charges almost nothing to own it. With an expense ratio of just 0.015%, you keep nearly all of your returns. There is no minimum investment, which makes it accessible to anyone opening a Fidelity account. This fund is available exclusively through Fidelity.
2. VTSAX: Vanguard Total Stock Market Index Fund
Expense ratio: 0.04% | Minimum investment: $3,000
VTSAX gives you exposure to the entire U.S. stock market, including large caps, mid caps, and small caps. It is one of the most popular index funds ever created. The $3,000 minimum may be a barrier for some beginners, but the ETF equivalent (VTI) has no minimum and trades on any brokerage. For a direct matchup of the two approaches, the FSKAX vs FXAIX guide compares total-market against S&P 500 index coverage.
3. FZROX: Fidelity ZERO Total Market Index Fund
Expense ratio: 0.00% | Minimum investment: None
FZROX is a total U.S. market index fund with a literally zero expense ratio. Fidelity makes money through other means, not fund fees. This makes FZROX one of the lowest-cost investments available anywhere. It is only available at Fidelity. Investors curious how FZROX stacks up against its Vanguard counterpart can find that answer in the FZROX vs VTI comparison.
4. FCNTX: Fidelity Contrafund
Expense ratio: 0.39% | Minimum investment: None
FCNTX is an actively managed fund that looks for large-cap growth companies trading below their perceived value. It has historically outperformed the S&P 500 over long periods, which is unusual for an actively managed fund. The higher expense ratio is the trade-off for active management.
5. VFIAX: Vanguard 500 Index Fund Admiral Shares
Expense ratio: 0.04% | Minimum investment: $3,000
VFIAX is Vanguard's S&P 500 index fund. It is nearly identical in performance to FXAIX but requires a $3,000 minimum and is available at most brokerages (not just Vanguard). It is a solid choice for investors who prefer Vanguard's structure or already have a Vanguard account.
6. FDGRX: Fidelity Growth Company Fund
Expense ratio: 0.83% | Minimum investment: None
FDGRX is one of Fidelity's flagship actively managed growth funds. It focuses on companies with above-average growth potential, often including technology and healthcare names. Its long-term performance has been strong, though the higher expense ratio and greater volatility mean it works best for investors with a longer time horizon.
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Buyer's Guide: How to Pick the Right Mutual Fund
Choosing a mutual fund is not just about past performance. A fund that returned 20% last year may not repeat that in the future. Instead, focus on a few key factors that tend to have more predictable effects.
Expense ratio: Every dollar you pay in fees is a dollar not compounding in your account. Even a difference of 0.5% per year adds up significantly over decades. Index funds typically charge 0.01% to 0.20%. Actively managed funds often charge 0.50% to 1.00% or more.
Investment minimum: Some funds like VTSAX and VFIAX require $3,000 to start. Others like FXAIX and FZROX have no minimum. If you are just getting started, a no-minimum fund may be the better entry point. If budget is a concern, the guide on how to invest $1,000 walks through how to allocate a small starting amount across funds like these.
Index vs active: Index funds aim to match a benchmark like the S&P 500. Actively managed funds aim to beat it. Research consistently shows that most actively managed funds underperform their benchmark over long periods, especially after fees. A few, like FCNTX and FDGRX, have beaten their benchmarks historically, but past results cannot guarantee future performance.
Tax efficiency: Mutual funds can generate taxable events inside your account even when you do not sell. Index funds tend to be more tax-efficient than actively managed funds because they trade less often. This matters more in taxable accounts than in tax-advantaged accounts like IRAs or 401(k)s.
Where you can buy it: Some funds are only available at specific brokerages. FXAIX and FZROX are Fidelity-only. If you invest at Robinhood or another brokerage, comparable ETFs like VOO or VTI may be your best alternative. The best Fidelity ETFs guide covers which Fidelity products are accessible outside of a Fidelity account.
Frequently Asked Questions
Are mutual funds better than ETFs for beginners?
Neither is strictly better. Mutual funds can be purchased at the end of each trading day at the net asset value price, while ETFs trade throughout the day like stocks. For long-term investors who buy and hold, the difference is minimal. ETFs tend to have no minimums and slightly better tax efficiency in taxable accounts, which can make them slightly more flexible for beginners.
Can I lose all my money in a mutual fund?
It is theoretically possible but extremely unlikely with a diversified index fund. Losing everything would require every company in the fund to go bankrupt simultaneously. That said, mutual funds do fluctuate in value, and you can lose a significant portion of your investment during market downturns. Staying invested over the long term has historically helped investors recover from short-term losses.
How much should I invest in a mutual fund each month?
There is no single right answer. A common starting point is investing a percentage of your income consistently, such as 10% to 15% of take-home pay. Many investors use a strategy called dollar-cost averaging, where they invest a fixed amount on a regular schedule regardless of market conditions. This approach can reduce the impact of short-term market swings.
Do I pay taxes on mutual fund gains every year?
In a taxable brokerage account, you may owe taxes on dividends and capital gains distributions even if you did not sell any shares. In a tax-advantaged account like a Roth IRA or 401(k), you do not owe taxes on these distributions each year. Keeping tax-inefficient funds in tax-advantaged accounts is a common strategy for minimizing your annual tax bill. For a fuller picture of how these account types differ, see the brokerage account vs retirement account guide.
