10 Largest Mutual Funds by AUM | Investing

Many investors focus on total returns when comparing one fund against another. While it’s good to know how much your money can grow, the size of the fund can also impact your total returns.

Each fund incurs operating costs that factor into the expense ratio. This ratio reflects the annual cost of investing in the fund. For instance, if a mutual fund has a 1% expense ratio, you will have to pay $10 for every $1,000 you put into the fund.

The expense ratio is a silent cost that gets deducted from the fund’s share value. Investors can end up with lower expense ratios by investing in mutual funds with higher assets under management, or AUM. This is simply because higher AUM can result in operating costs getting spread among more investors and assets.

One way you can save money and possibly increase your returns is by focusing on the largest mutual funds. However, a few of the largest funds have relatively large expense ratios as well when compared with some of the low-cost index funds out there, and especially low-cost exchange-traded funds, or ETFs.

Many of the largest mutual funds use popular indexes like the S&P 500 as benchmarks with the goal of generating competitive market returns.

This list of the largest mutual funds is based on Fidelity’s Mutual Fund Research screener, which lists mutual funds from the highest net assets to the lowest. These are the 10 largest mutual funds by portfolio assets as of Oct. 14:

*Seven-day SEC yield as of Oct. 14.

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

With a $3,000 minimum initial investment, investors in VTSAX get exposure to nearly 3,700 stocks, with an emphasis on technology. The large blend fund uses the CRSP U.S. Total Market Index as a benchmark. Its trailing-12-month yield is 1.3%.

Vanguard 500 Index Fund Admiral Shares (VFIAX)

Another large blend fund, VFIAX uses the S&P 500 as its benchmark and puts most of its assets into the information technology sector. It has a trailing-12-month yield of 1.3% and a low 0.04% expense ratio.

Fidelity 500 Index Fund (FXAIX)

Just like VFIAX, this large blend fund seeks to mimic the returns of the S&P 500. The fund’s top holdings primarily consist of technology companies. FXAIX has been around since 1988, and it has a 10-year annualized return of 14%. The fund has low turnover of 2%, an ultra-low expense ratio of 0.015% and is up by more than 20% year to date. There’s no minimum investment requirement, and it has a trailing-12-month yield of 1.2%.

Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

This fund, which requires an initial investment of $3,000, uses the FTSE Global All Cap ex U.S. Index as its benchmark. VTIAX gives investors exposure to more than 8,600 stocks with a turnover rate of 4% and about 10% of assets in the top 10 holdings. A decent trailing yield of 2.8% adds to the attraction.

The Fidelity Government Money Market Fund is a low-risk fund that gives investors exposure to short-term U.S. debt. A money market fund is a mutual fund that generally aims for short-term, higher-quality investments. High liquidity with low risk is one of this fund’s goals by design.

Elevated interest rates have helped the fund generate higher returns for investors lately; however, its year-to-date return is 4% as the Federal Reserve is poised to make more rate cuts. Its seven-day SEC yield is 4.5% as of Oct. 14, and it has no minimum investment requirement, but it has a 0.42% expense ratio to consider.

This fund is essentially the same as SPAXX. The difference is that FZCXX has a minimum investment of $100,000 and a lower expense ratio of 0.32%. That means a higher yield of 4.6%, but the super-high minimum might be a deterrent for some investors.

Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

Vanguard Total Bond Market Index Fund Admiral Shares tracks the Bloomberg U.S. Aggregate Float Adjusted Index, and it has more than 17,800 bond holdings. This fund offers exposure to U.S. Treasurys and mortgage-backed securities, with an attractive trailing yield of 3.4% and an equally attractive expense ratio of 0.05%.

Vanguard Institutional Index Fund (VINIX)

VINIX is a large blend mutual fund that has a low 0.035% expense ratio. With 503 equity holdings, the passively managed fund aims to mirror the S&P 500’s performance. While many funds use the S&P 500 as a benchmark, VINIX requires a minimum investment of $5 million, hence the “institutional” in its name. It’s a popular choice in 401(k) plans, however, so even if you don’t have multi-millions to invest, you may be able to access it through your employer’s retirement plan options.

American Funds The Growth Fund of America Class A (AGTHX)

AGTHX is a fund that caters to growth investors. U.S. equities make up almost 90% of the fund’s total assets. Most of the stocks in the fund are large-cap growth stocks, with Meta Platforms Inc. (META) and Microsoft Corp. (MSFT) as top holdings. The minimum investment is $250, and the fund has an expense ratio of 0.63%. AGTHX has a 15-year annualized return of 13.6% and a 43.4% return over the past year, due to its tech-heavy bent.

American Funds The Growth Fund of America Class C (GFACX)

This fund gives investors exposure to the same assets as the Class A shares in AGTHX. The minimum investment is $250, and the fund currently holds roughly 290 stocks. Its expense ratio is higher than the Class A version, at 1.39%.

Mutual funds with many assets under management tend to have lower expense ratios because they can spread the costs among more capital. Most mutual funds won’t raise their expense ratios by 50% if shares also go up by 50%.

While assets under management can tip an investor off about the expense ratio and if it will stay low, there are other details to consider. Investors should look at a fund’s historical returns and asset allocation.

Historical returns aren’t a reliable indicator of future results. However, steady gains over the long run can be promising for investors who initiate positions in the mutual fund.

Asset allocation decides how much exposure you have to certain types of investments, such as tech companies, large-cap stocks and other opportunities. Some mutual funds will line up better with the asset allocation you desire based on your risk tolerance.

If a mutual fund tracks a popular index like the S&P 500, an investor should compare the fund’s performance with the benchmark. The returns should be similar. Mutual funds may have a slight gap compared to the benchmark due to the expense ratio. Still, some mutual funds manage to outperform the benchmark.

Mutual funds and ETFs both give investors exposure to many stocks. Funds have established goals and asset allocations that investors can view before buying shares.

Some of the mutual funds included on this list are also available as ETFs. Expense ratios and asset allocations are similar, but the key difference is that ETFs trade during market hours. ETFs trade throughout the day and have price fluctuations just like any individual stock. It is also possible to trade options that follow an ETF. Investors can use limit orders, stop-losses and other types of orders for ETFs.

Mutual funds cannot be traded throughout the day, but you can execute a buy or sell order that will get placed at the end of the day. Mutual fund prices only change once per day, when the market closes.

Since mutual funds do not offer the same level of trading flexibility as ETFs, they are more suited for passive investors. You can still invest in ETFs and be a passive investor, but ETF investors have more opportunities to trade throughout the day if they wish.

Mutual funds give investors broad exposure to the stock market and allow them to track various indexes. These funds offer instant portfolio diversification and asset management, which can save investors a lot of time.

Investors can put their money into actively managed mutual funds and let the portfolio managers do all of the work. You can also put your money into a passively managed mutual fund to save more money on fees. Some investors buy individual stocks along with mutual funds, or choose a fund with larger positions in their favorite stocks.

The main downside with mutual funds is the expenses. Some mutual funds can get expensive, with front and back loads impacting total returns. Luckily, it’s easy to find mutual funds with no loads and very low expense ratios. Investment firm Vanguard is a good place to start your search for low-cost mutual funds.

Investors have to weigh whether an expense ratio justifies having someone else handle the investing for them to achieve market returns. For many investors, a small expense ratio for a fund with significant AUM and solid historical returns is worth the time saved.