Best Mutual Funds and ETFs to Invest In for 2026

If 2025 taught investors anything, it’s that markets keep evolving and smart money is allocating across themes, regions, income streams, and risk profiles rather than clinging to a single asset class. U.S. stock funds climbed around 14.6% on average (per The Wall Street Journal), international equities led in global returns, and bond funds still delivered steady gains, even amid macro uncertainty and central bank policy shifts.

As we look ahead to 2026, building a diversified portfolio of mutual funds and ETFs grounded in cost efficiency, strategic exposure, and risk-adjusted returns will be critical for achieving both growth and resilience.

Like many professional investors and analysts, we’ll approach this not by promising “top performers,” but by highlighting well-positioned mutual funds and ETFs that reflect broader market opportunities, diversification benefits, and historically strong performance trends. These fund categories suit a range of goals, from growth and income to stability and diversification.

Why Funds Still Matter in a World of Individual Stocks

Before diving into specific funds, it helps to understand why mutual funds and ETFs remain central to investing:

Market leadership is broadening. 2025 saw strong equity returns, with U.S. stock mutual funds averaging solid performance and international funds outpacing domestic peers in some segments.

Income strategies matter. With interest rates still meaningful for bond and income-oriented strategies, yield-focused ETFs that use dividends or covered calls are attracting flows.

Diversification: Funds spread risk across many companies or bonds.

Cost efficiency: Many index funds and ETFs have very low expense ratios, letting more of your money compound over time.

Liquidity & transparency: ETFs trade like stocks and report holdings daily, while mutual funds provide structured exposure with professional management.

Tax efficiency: ETFs are typically more tax-efficient than mutual funds because of their unique share-creation/redemption mechanics.

With nearly 4,780 U.S. listed ETFs now available (surpassing the number of individual stocks) there are immense opportunities for thoughtful portfolio construction.

Top Mutual Funds to Consider in 2026

Mutual funds still play a strong role in long-term investing, particularly for diversification and professional management. Key picks for 2026 blend low costs with solid historical performance and credibility.

Vanguard 500 Index Fund [VFIAX] (Core U.S. Exposure)

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This is a foundational choice for many portfolios because it mirrors the S&P 500, the benchmark for U.S. large-cap equities. Historically, indexed broad U.S. equity exposure has offered strong long-term return potential with low fees.

Why it matters: Captures the largest U.S. companies that tend to drive market returns over extended horizons.

Who it’s for: Investors looking for a low-maintenance, diversified, core equity holding.

T. Rowe Price Financial Services Fund [PRISX] (Sector-Focused Growth)

Financial stocks ( banks, insurers, and payment companies) have structural drivers in 2026, including potential rate stability and credit spread normalization. T. Rowe Price’s financial sector mutual fund pools professional expertise to navigate this space.

Why it matters: Offers sector tilt with active management to capitalize on financial industry catalysts.

Who it’s for: Investors seeking focused exposure to industry fundamentals beyond broad indexes.

Vanguard Strategic Equity Fund [VSEQX] (Dividend and Growth Blend)

For investors who want both income and capital appreciation, VSEQX strikes a balance. With a historically strong dividend yield and low expense ratio relative to its return profile, it fits well in balanced equity allocations.

Why it matters: Combines sustainable dividend income with broad market equity growth.

Who it’s for: Long-term investors seeking yield without sacrificing growth potential.

BlackRock Enhanced Capital and Income Fund [XCIIX] (Income-Focused Strategy)

Using a covered-call overlay, this fund generates income from equities while aiming to dampen volatility, a niche approach that can work well for investors who want stock market growth plus income in a single package.

Why it matters: Helps generate regular income while maintaining an equity tilt.

Who it’s for: Retirees or income-oriented investors with moderate growth expectations.

Best ETFs to Watch in 2026

ETFs combine diversification with flexibility and typically lower cost than many traditional mutual funds, which is key when building efficient, tax-aware portfolios.

Vanguard S&P 500 ETF [VOO]

Consistently among the most popular ETFs due to its ultra-low expense ratio (around 0.03%) and S&P 500 exposure. Broad inflows and long-term endorsements (including in some well-known investing wills) underscore its appeal.

Why VOO:

Very low cost

Long history of tracking U.S. large-cap performance

Easy diversifier or core holding for most portfolios

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If you only want one core equity ETF for broad U.S. exposure, VOO is frequently cited as a top choice.

iShares Core MSCI EAFE ETF [IEFA] (International Diversification)

Large, diversified international equity ETF covering Europe, Australasia, and the Far East. International markets often behave differently than U.S. markets, providing a valuable diversification layer.

Good for:

Reducing home-country concentration risk

Capturing growth in developed global markets

Investors seeking broader global balance

JPMorgan Equity Premium Income ETF [JEPI] (Income-Focused Equity Exposure)

JEPI uses a covered-call strategy to generate higher income with lower volatility than broader equity funds, offering a forward yield that appeals to income-oriented investors.

Role in a portfolio: A way to generate yield while maintaining broad equity exposure, useful in low-yield environments.

Avantis International Equity ETF [AVDE] (Factor-Based International Growth)

A systematic, factor-tilted international ETF that emphasizes size, value, and profitability characteristics, often linked to historically higher risk-adjusted returns.

Why AVDE: Adds international exposure with a smart, evidence-based tilt toward potentially outperforming market factors.

Principal U.S. Mega-Cap ETF [USMC] (Large-Cap Leaders)

Focused on market leaders with strong financial profiles and competitive advantages, this ETF offers growth exposure at a low cost, making it appealing for long-term investors who want concentration in high-quality companies.

Best for: Investors seeking growth through established large companies with durability and scale.

Sector and Tactical ETF Opportunities in 2026

Beyond core index ETFs and mutual funds, a few tactical and sector-based ETFs may play valuable roles:

SPDR SSGA U.S. Sector Rotation ETF (XLSR) uses momentum and quality signals to rotate exposure across sectors, a way to capture leadership trends dynamically.

Global Tactical Allocation ETF (GTO) (noted in search results) focuses on bonds and credit sectors with tactical shifts, which can provide income and risk management in uncertain markets.

These tactical strategies aren’t core holdings but can complement a diversified portfolio, especially for investors who want exposure to market regime changes.

How to Choose the Right Funds or ETFs for Your Portfolio

Picking “the best” funds isn’t only about past performance (though that helps). It’s about alignment with your goals, risk tolerance, and time horizon.

Core Exposure: Start with broad market index funds like VOO (U.S.) and IEFA (international).

Growth Tilt: Add targeted growth funds like FBGRX or USMC for potential excess returns.

Income Strategy: Consider income-oriented ETFs such as JEPI to balance growth with yield.

Diversification: Mid/small cap or strategic funds like OWSMX can provide exposure beyond the largest companies.

Tactical or Sector Plays: XLSR and GTO offer opportunities for adjusting to changing markets.

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This kind of layered approach helps you balance return potential with risk, avoiding over concentration in any one style or segment.

Key Takeaway

There’s no one “best” investment for everyone. The right mutual funds and ETFs for 2026 depend on whether your priority is growth, income, diversification, or risk management. The funds and ETFs above reflect a blend of these approaches, backed by performance trends and structural positioning heading into 2026. Whether you’re building a core portfolio or adding satellite positions, aligning your picks with broader market realities and your personal goals makes your investment strategy far more intentional and resilient.

We believe the information in this material is reliable, but we cannot guarantee its accuracy or completeness. The opinions, estimates, and strategies shared reflect the author’s judgment based on current market conditions and may change without notice.

The views and strategies shared in this material represent the author’s personal judgment and may differ from those of other contributors at IntriguePages. This content does not constitute official IntriguePages research and should not be interpreted as such. Before making any financial decisions, carefully consider your personal goals and circumstances. For personalized guidance, please consult a qualified financial advisor.