There is a huge body of evidence showing the power of so-called index funds — that is, mutual funds or exchange-traded funds that are tied to a stock market index such as the S&P 500.
The latest data point: Last year, two-thirds of investment managers who handpicked large stocks did worse than if they simply put their money into the fixed list of S&P 500 components.
The long-term data is even more compelling, with a whopping 82% of active funds underperforming index funds over the past 10 years.
Still, for many investors, a plain vanilla approach to investing via index funds isn’t enough. Whether it’s the allure of being in the minority achieving outperformance or whether it’s a specific financial situation in their household that demands a different approach, many Americans are looking for something different than simply a “set it and forget it” approach with index funds.
A good investment portfolio is always diversified, of course, something experts all recommend. In addition, they advise against risky bets that can bankrupt you if they go south.
That said, a few strategic moves in a portfolio can make a big difference — particularly when used in concert with index funds that form the foundation of your retirement strategy. Quality often trumps quantity in these situations, and allocating just a little bit of your nest egg toward smart picks can really pay off in the long run.
Here are three top funds recommended by investment experts to help you achieve your financial goals:
Long-Term Treasury Bonds for Protection
If you have a substantial amount of savings already, you should be very proud of your saving strategy.
And you also should consider looking for stable investments to protect that nest egg in a choppy market, said Chuck Self, a chief investment officer at ETF investment strategist of iSectors in Appleton, Wis.
That’s why he recommends the iShares 20+ Year Treasury Bond ETF (TLT), which yields about 2.4% right now.
“The iShares 20+ Year Treasury Bond ETF is a great option for investors looking to combat slowed growth (for the U.S. economy) and provide diversification for their portfolios,” Self said.
He added that “Treasuries are attractive to foreign investors, too,” given slowing global growth rates and the fact that U.S. government bonds are the world’s safe haven investment.