Over 100 million Americans hold mutual funds in retirement accounts or personal portfolios, making them one of the most common investment vehicles in the country. Yet many investors picked their fund years ago and haven't revisited whether it still makes sense.
This guide covers five mutual funds worth knowing about in 2026, with a focus on low costs, diversification, and long track records. None of this is a buy recommendation. Your best fund depends on your goals, time horizon, and existing holdings.
Our Top Picks
FXAIX: Fidelity 500 Index Fund
FXAIX tracks the S&P 500 Index and charges an expense ratio of 0.015%, which is among the lowest of any mutual fund available to individual investors. There is no investment minimum to open a position at Fidelity.
Because it mirrors the S&P 500, FXAIX gives you exposure to 500 large U.S. companies across every major sector. It has historically tracked its benchmark with minimal deviation. For a side-by-side look at how FXAIX stacks up against Fidelity's total-market fund, see our FSKAX vs FXAIX comparison. For investors who want simple, low-cost U.S. large-cap exposure, FXAIX is a frequently cited starting point.
VTSAX: Vanguard Total Stock Market Index Fund
VTSAX holds the entire U.S. stock market, including large, mid, and small-cap companies. It currently holds over 3,700 stocks, making it one of the most diversified single-fund options for U.S. equities.
The expense ratio is 0.04%, and the fund requires a $3,000 minimum initial investment at Vanguard. VTSAX is often recommended in personal finance communities as a core holding because of its breadth and low cost. It is the mutual fund equivalent of the VTI ETF.
VFIAX: Vanguard 500 Index Fund Admiral Shares
VFIAX is Vanguard's S&P 500 index mutual fund, comparable to FXAIX but from a different provider. Its expense ratio is 0.04%, and the minimum investment at Vanguard is $3,000. For a direct comparison of VFIAX versus its ETF counterpart, see VFIAX vs VOO.
For investors who prefer to consolidate their accounts at Vanguard, VFIAX offers the same S&P 500 exposure as competitors at a similarly low cost. Long-term performance closely tracks the index it follows.
FCNTX: Fidelity Contrafund
FCNTX is an actively managed fund that has existed for over 50 years. Its manager looks for companies trading below their perceived intrinsic value, with a tendency toward large-cap growth stocks.
The expense ratio is around 0.44%, which is higher than index funds but lower than many actively managed alternatives. Contrafund has outperformed the S&P 500 over certain long periods, though past performance doesn't guarantee future results. It represents an option for investors willing to pay a modest premium for active management with a long history.
DODGX: Dodge and Cox Stock Fund
DODGX is a value-oriented actively managed fund with a team-based investment approach and over 80 years of operation. It tends to hold stocks it considers undervalued relative to long-term earnings potential.
The expense ratio is approximately 0.52%, and there is a $2,500 minimum investment. DODGX has periods of underperformance relative to growth-heavy indexes, but it also holds up relatively well during market corrections when growth stocks sell off sharply. It may appeal to investors who want some active management with a value tilt.
Where to Access These Funds
Most of these mutual funds are available through major brokerages. Robinhood offers access to many mutual funds and ETFs alongside stocks, with no trading commissions. It's a practical starting point if you want a single platform for multiple investment types.
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How to Choose the Right Mutual Fund
With thousands of mutual funds available, a few filters can narrow the field:
Expense ratio. This is the most reliable predictor of relative performance among similar funds. Lower fees compound into significantly better outcomes over decades. For a broad market fund, anything above 0.50% deserves scrutiny.
Index vs. active. Index funds track a benchmark mechanically and typically outperform most actively managed funds over long periods, largely because of lower fees. Active funds can outperform but rarely do so consistently after costs. For a deeper look at this debate, see our ETF vs mutual fund guide.
Minimum investment. Some funds require $3,000 or more to start. If you're beginning with less, ETF equivalents of the same strategy (like VTI instead of VTSAX) often have no minimum and offer the same underlying exposure.
Tax efficiency. In taxable accounts, mutual funds can distribute capital gains to all shareholders each year, creating a tax bill even if you didn't sell anything. ETFs generally distribute fewer capital gains. If you hold investments in a taxable brokerage account, ETFs may be more tax-efficient than comparable mutual funds.
Your existing portfolio. If your 401(k) already holds an S&P 500 index fund, adding a second one in a Roth IRA duplicates exposure. Consider whether a fund fills a gap, like international stocks or bonds, rather than adding more of what you already own.
Index vs. Active: What Research Shows
S&P Dow Jones Indices publishes an annual SPIVA report comparing active fund performance to benchmark indexes. Over 15-year periods, roughly 85-90% of active U.S. equity funds underperform their benchmark after fees.
This doesn't mean every active fund is bad. A small number do outperform over long periods. But identifying them in advance is difficult, and paying higher fees for the chance is a bet most financial educators advise against for the average investor.
Index funds, particularly at very low expense ratios, are the starting point most commonly recommended by independent financial researchers. Platforms like Fidelity, Schwab, and Vanguard all offer index funds at similarly competitive expense ratios, so your choice of provider is often less important than choosing low-cost index investing in the first place.
This article is for educational purposes only and is not financial advice. All investing involves risk, including possible loss of principal. Past performance of any fund does not guarantee future results. Consider your individual financial situation and consult a licensed financial advisor before making investment decisions.
Frequently Asked Questions
What is the difference between a mutual fund and an ETF?
Both mutual funds and ETFs hold a collection of stocks or bonds, but they trade differently. ETFs trade throughout the day on a stock exchange like a stock, while mutual funds are priced once per day after the market closes. ETFs often have lower expense ratios and greater tax efficiency in taxable accounts, while some mutual funds have no trading commissions if held at the fund company directly.
Are index mutual funds or actively managed funds better?
Research consistently shows that low-cost index funds outperform the majority of actively managed funds over long periods, primarily because of lower fees. Active funds occasionally beat their benchmarks, but identifying the ones that will do so in advance is very difficult. For most beginners, starting with low-cost index funds is a widely recommended approach.
How much money do I need to invest in a mutual fund?
Minimums vary by fund. Some have no minimum at all, while others like VTSAX and VFIAX require a $3,000 initial investment. If you want to start with less, ETF equivalents of those same strategies (like VTI for VTSAX) can be purchased in any dollar amount using fractional shares on platforms that support them.
Can I hold mutual funds in a Roth IRA?
Yes. Mutual funds can be held in any tax-advantaged account, including Roth IRAs, Traditional IRAs, and 401(k)s. Holding mutual funds inside a Roth IRA eliminates the capital gains distribution tax issue that affects taxable accounts, making the account type a good fit for funds that tend to distribute gains annually.
