Best performing mutual funds you need during a recession | Inquirer

Best performing mutual funds you need during a recession

/ 03:32 PM June 01, 2021

Investors are looking for the best-performing mutual funds and other additions to their portfolios. We’re in the middle of a global recession, so they find new ways to secure their finances. One of the best ways is investing in mutual funds.

First, we’ll discuss basic details about the current global economic downturn and mutual funds. Then, we will go deeper into actively managed funds with even more information. More importantly, we’ll suggest some of the sectors with the top-performing mutual funds.

The coronavirus has negatively affected the world, especially the economy. In response, investors are looking for ways to protect themselves from the coming inflation. Mutual funds are one of the typical options during a recession.


Are we in a global recession?

Are we in a global recession?

The COVID-19 pandemic is the one problem we share around the world. It doesn’t just hurt people’s health. It also harms many aspects of our society, especially the economy.

The world responded to the COVID-19 pandemic by keeping people indoors. They ordered businesses to close until they get rid of the virus.

Unfortunately, it had unintended results. It caused a lot of people to lose their jobs. Worse, many companies have shut down for good. They simply cannot continue waiting.

What’s more, countries have shut their borders. This meant barely any overseas travel for tourism and trade. In turn, the supply of nearly everything decreased.

Following the law of supply and demand, the latter went up. This caused almost everything to cost so much more. For example, corn prices rose to 44% in the United States!

Even now, several countries are still having a hard time dealing with the virus. We still don’t know when we could put an end to this disease.


Despite all this, investors see a way to keep their finances safe. They looked for investment options that aren’t as affected by downturns. One of their usual options is mutual funds.

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What are mutual funds?

What are mutual funds?

Investing in stocks means buying a bit of ownership of a certain business. In contrast, mutual funds invest in several companies or other asset types.

They do this by trying to beat a certain market index. These include the Standard & Poor 500 and the Dow Jones Industrial Average index.

It has a team that will actively look for new investments on your behalf. That’s why mutual funds are also known as actively managed funds.

Their goal is to get better yields than the index. If they fail, you lose on your investment while paying the fees. Otherwise, you get to enjoy more earnings!

On the other hand, index funds follow market indices instead of beat them. They’re usually safer than mutual funds. Due to these unprecedented times, that’s not assured anymore.

People should decide their options based on their investment strategies. Learn more about mutual funds to make a better investment decision.

Types of mutual funds

Before we get into the best-performing mutual funds, let’s see the types available. You may choose mutual funds based on the asset types they cover.

Stock funds invest in shares of various companies. You may divide them further into other categories like the market cap. The types follow specific criteria:

  • Small-cap – businesses with stocks that are less than $1 billion in total
  • Mid-cap – companies with stocks worth $1 billion to $5 billion in total
  • Large-cap – businesses with large-cap growth or a total of over $5 billion worth of stocks
  • Growth funds – deals with stable companies with stocks that are likely to remain consistent in the long run
  • Value fund – companies with disappointing earnings
  • Balanced – stocks and bonds, often 25% of each
  • Sector – focuses on certain industries like energy or medicine.

Meanwhile, bond funds buy debts from governments and businesses. Bonds are typically seen as safe investments. Still, the current situation may change this. Here are some of your options:

  • High-quality corporate – only chooses from the top-tier companies
  • US government – holds Treasury bonds and others from federal agencies
  • Global – has either the US or foreign bonds
  • Municipal – buy tax-free bonds from local and state governments

Best performing mutual funds you need during a recession

Best performing mutual funds you need during a recession

Despite bad times, certain industries still grow. These are the ones people need even more during those moments. For instance, some food stores perform well, even during recessions.

That’s why one of the best mutual funds you need is sector funds. It allows you to invest in those fields that can withstand the current situation.

If those industries continue to grow, so will your investments. Here are the sectors that have the best performing mutual funds you need:

  • Consumer staples – These are the funds for grocery items. No matter what, people will go to supermarkets for most of their needs. That’s why you may want the Consumer Staples Select Sector (SPDR) fund.
  • Healthcare – The coronavirus made it harder to get medical goods and services. This means more people would look for them. One of your best bets is the Fidelity MSCI Health Care Index ETF (FHLC).
  • Precious metals – Investors also buy gold bullion coins and bars in response to inflation. There are bond funds that deal with this, like the Aberdeen Standard Gold ETF Trust (SGOL).
  • Telecommunications – People rely more on internet connection due to the pandemic. They need it more than ever for work and study. That’s why Fidelity Select Telecommunications Portfolio (FSTCX) could be a good choice.

You may find the best-performing bond funds in more sectors. Check those out for more investment options. Don’t forget to learn more before investing!

Tips before investing

Tips before investing

Always know all you can before investing. Make sure you know how it will grow. Check the factors that could affect fund returns. Also, learn all the terms related to bond funds.

For example, learn what year-to-date returns and expense ratios are. This would help you pick the best funds and check their progress.

Visit the fund’s website to learn more. Ask for details such as their expenses and strategy. Here are some of the questions you should ask:

  • How much would I need to spend on the fund?
  • What Does it Take as the companies that get picked for this fund?
  • How will the fund match my investment goals?
  • What are some risks with this fund?

More importantly, you don’t have to be a fund investor only. While you’re looking for the best-performing bond funds, you might be missing out on these options:

  • Stocks – Look for long-term growth stocks with dividends.
  • Bonds – Instead of bond funds, you may pick and buy bonds yourself. They’re often safer than stocks. Expect fewer returns, though.
  • Real estate – Back then, you need lots of money to get into real estate. Now, crowdfunding lets more people get into them much easier. You may start with around $500!
  • Cryptocurrency – Bitcoin and other digital bucks are taking the world by storm. It will change the world in a lot of ways. Some people see the current price dips as bad news. Yet, this makes it much easier for newcomers to join crypto!

Final thoughts

Mutual funds try to beat the market indexes. During these uncertain times, the best-performing mutual funds could adapt to the changing market.

As a result, it may give returns no matter what happens. Yet, this will depend on the ones you picked. Make sure you get the best mutual funds.

Online services like EDGAR can help you find mutual funds. Also, you may speak with an expert for more help. Still, you may only lower risk, but never remove it.

Learn more about mutual funds

What are good mutual funds in 2021?

Some of the best mutual funds are found in certain sectors. This includes precious metals and healthcare. Check online to find other good funds.

Can you lose money in mutual funds?

Depending on your mutual fund, it may fail to earn. Expect risk in any investment. This is why you should invest in other options like stocks.

Should I buy mutual funds when the market is down?

Yes, because the prices are lower. You may get mutual funds at better prices while the market is down. Still, check carefully before you buy.

Disclaimer: This article is the author’s personal opinion, which may differ from the “official” statements or facts. All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by constitutes an investment recommendation, nor should any data or content published by be relied upon for any investment activities. strongly recommends that you perform your own independent research and/or speak
with a qualified investment professional before making any financial decisions.

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TAGS: Best of, fund, interesting topics, pandemic, USFINANCE
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