Having performed well in 2012 with a healthy 1-year return of over 9%, this fund by Wells Fargo seems to be well-poised for some good results in 2013 as well. It is primarily focused on the municipal bond market with 60% of its assets invested in municipal securities which are exempt from federal income tax. The remaining assets are divided between low-grade municipal securities and corporate debt securities. Vital Stats

• Total AUM: $53.99 Million
• NAV: $11.71
• Loads if any: None
• Company: Wells Fargo
• Primary Asset Allocation: Bonds (91%)
• YTD returns : 1.30%
• 1-year: 9.83%
• 3-years: 10.41%
• 5-years: N/A
• Rating: ★★★★★

The fund focuses on long term capital appreciation, investing in companies typically having market capitalization of over $1 billion. The portfolio consists of mid-cap and large-cap companies which are expected to show above average growth. Vital Stats

• Total AUM: $18.20 Billion
• NAV: $43.86
• Loads if any: None
• Company: Harbor Capital Advisors Inc
• Primary Asset Allocation: Stocks (98%)
• YTD returns : 4.41%
• 1-year: 7.12%
• 3-years: 12.33%
• 5-years: 5.70%
• Rating: ★★★★

It is a value based fund, aiming to provide steady dividend income to its investors and as a practice invests up to 80% of its assets in companies which provide regular dividend distribution. Vital Stats

• Total AUM: $3.23 Billion
• NAV: $13.81
• Loads if any: Deferred @ 1%
• Company: Sunamerica Asset Management Corp
• Primary Asset Allocation: Stocks (98%)
• YTD returns : 6.96%
• 1-year: 15.58%
• 3-years: 14.97%
• 5-years: 8.98%
• Rating: ★★★★★

The fund aims to invest up to 80% of its securities in stocks of mid-cap companies, especially those which show promise in terms of growth and capital appreciation. As the economy recovers, the mid-cap companies will benefit the most as their share prices will go up, it is prudent to keep some investment in these companies to take advantage of the market conditions later. Vital Stats

• Total AUM: $4.44 Billion
• NAV: $16.95
• Loads if any: None
• Company: Principal Management Corp
• Primary Asset Allocation: Stocks (99.49%)
• YTD returns : 8.15%
• 1-year: 20.08%
• 3-years: 20.60%
• 5-years: 9.67%
• Rating: ★★★★★

The funds policies are attuned toward achieving a blend of stocks and bonds, in the typical 60/40 ratio. This fund provides both capital appreciation and an element of security to investors and in these turbulent times is a good way to secure your investment. Vital Stats

• Total AUM: $67.89 Billion
• NAV: $35.33
• Loads if any: None
• Company: The Vanguard Group, Inc
• Primary Asset Allocation: Stocks (65.37%) Bonds (32.77%)
• YTD returns : 4.49%
• 1-year: 12.26%
• 3-years: 11.49%
• 5-years: 6.04%
• Rating: ★★★★

One of the best funds in this list, the Vanguard Dividend Growth aims to provide investors with regular dividend income, by investing in blue-chip stocks of top-rated companies. The fund has consistently given dividends and the YTD return is already a good 6 plus percent. Vital Stats

• Total AUM: $12.70 Billion
• NAV: $17.76
• Loads if any: None
• Company: The Vanguard Group, Inc
• Primary Asset Allocation: Stocks (97.77%)
• YTD returns : 6.61%
• 1-year: 13.13%
• 3-years: 13.98%
• 5-years: 6.76%
• Rating: ★★★★

The primary goal of the fund is to provide long-term capital appreciation to investors and stay ahead of the S&P 500 index. It is rated 5 stars across all (1-year, 3-year, 5-year) investment periods and its 2012 performance has been good with a return of nearly 12%. Vital Stats

• Total AUM: $768.19 Million
• NAV: $19.83
• Loads if any: None
• Company: Robeco Investment Management, Inc
• Primary Asset Allocation: Cash (69.16%) Stocks (21.86%)
• YTD returns : 2.6%
• 1-year: 11.9%
• 3-years: 15.4%
• 5-years: 17.1%
• Rating: ★★★★★

A contrafund aims to invest in companies whose potential has not been judged by the market as yet and invests in them. The subsequent appreciation in share prices gives a healthy return for investors. The Fidelity Contrafund has been a consistent performer since its inception in 1990, as is expected to do well in 2013 as well. Vital Stats

• Total AUM: $88.07 Billion
• NAV: $81.10
• Loads if any: None
• Company: Fidelity Brokerage Services LLC
• Primary Asset Allocation: Stocks (98.58%)
• YTD returns : 5.51%
• 1-year: 12.49%
• 3-years: 14.16%
• 5-years: 5.29%
• Rating: ★★★★

Although the real estate sector is still recovering, there are signs that demand for properties is going up, along with prices and the launch of many new construction projects. This may be a good time to invest in a fund which focuses on a particular sector, real estate and retail are both expected to rebound this year. Vital Stats

• Total AUM: $3.55 Billion
• NAV: $11.74
• Loads if any: Front-Load @ 4%
• Company: Fidelity Brokerage Services LLC
• Primary Asset Allocation: Bonds (51.98%) Stocks (23.56%)
• YTD returns : 3.17%
• 1-year: 16.74%
• 3-years: 14.27%
• 5-years: 8.74%
• Rating: ★★★

*All NAV data as on 2/15/2013

Lower Risk One does not have direct exposure to the stock markets which can be volatile this year as the economy recovers from the after-effects of the recession. At the same time you can get benefits with good investment policies of talented fund managers in large mutual fund corporations. Diversification The top-performing mutual funds can be from the large-cap and mid-cap category, where the risk is slightly higher because of sharp movements of stock prices. This will enable you to diversify your portfolio, as you can spread the risk over a variety of stock options. Professional Management Mutual funds offer expert investment management as they have fund managers and teams of analysts who track the market and make changes in the composition of the stock portfolios accordingly. One may not be able to do such intensive research alone due to time or other constraints. One can get expert investment advice by personally consulting relationship managers of major fund houses. Investment options One can invest both large amounts as one time bulk purchases of mutual funds, or choose to invest in contributions by purchasing a Systematic Investment Plan (SIP). This is a feature unique to this class of investment and helps small investors do both; save money and see it grow over time. Another great option open to mutual fund investors is the tax-advantage funds which enable one to save taxes relative to the investment made. The flexibility of mutual funds is what attracts investors of all ages. Better Returns Investing in a mutual fund gives better returns over time as compared to other forms of investment such as bank deposits or Commercial Deposits, simply because one becomes part of the stock market, which may be of a speculative nature, but gives higher capital appreciation than any other mode of investment. At the same time the risk is lowered as this is a collective form of investment and your money is not riding the tides alone. The best mutual funds to invest in the coming years would be the ones which have a diversified stock holding across various sectors of the economy. These sectors can be banking, finance, insurance, automobiles, information technology and educational services. The funds should be allocated in such companies which have a high growth potential over the next five to ten years and are available at cheap valuations as compared to their prices. Identifying such investments would be the challenge before fund managers and wealth managers.