6 Best Mutual Funds and ETFs to Buy for 2026

New year, new you … new portfolio?

Nah. No need to get crazy.

We ended 2025 saying that New Year's resolutions, while sound in spirit, are often so big, so bold, and so sweeping that they become counterproductive—that the best way forward is through small, achievable steps.

That's the same way most investors should view their established portfolios. Unless something is truly wrong—that is, unless you've built a portfolio that can't accomplish what you want it to—the best changes you'll make will be smaller shifts over time. You know: Your regular rebalancing. Allocating a little more to investments in an emerging trend you believe in. Healthy, conventional moves.

And today, we'll show you some funds that you might look to as part of those moves.

6 Best Mutual Funds & ETFs for 2026

Every year around this time, we observe the investment landscape for ideas. For individual stocks, we see what the pros like at any given moment—sentiment that's obviously more likely to change as time progresses and circumstances evolve. 

We also look at investment funds, most commonly mutual funds and exchange-traded funds (ETFs) … but we look at them differently.

Young and the Invested Tip: Is your resolution to get on top of your retirement plan? You can start right away by subscribing to our new FREE newsletter, Retire With Riley.

While the specifics of what they own over time might change, funds are a little more permanent in purpose. Large-cap funds will hold large-cap stocks. International bond funds will hold other countries' debt. The individual holdings won't always be the same, but their goals—and what they provide to us as investors—is a lot more consistent than individual equities.

And so we look at them like tools in a toolbox. "If you need to do this, this fund is an appropriate tool to use."

With that in mind, here's a short list of some of our top picks for the year to come across two of our centerpiece articles for the year: the best mutual funds for 2026, and the best ETFs for 2026.

1. Fidelity 500 Index Fund

Fund type: Mutual fund
Style: U.S. large-cap stock
Purpose: Core portfolio holding
Expense ratio: 0.015%, or 15¢ per year for every $1,000 invested
Minimum initial investment: None

You've likely been told ad nauseam that the best thing you can do when you start investing is to go out and buy an index fund—specifically, an S&P 500 index fund. It's default advice at this point, espoused by none other than Warren Buffett, one of the richest human beings on the planet.

In so many situations, your cheapest options would be among exchange-traded funds, which offer both lower fees and have much lower minimum initial investments (how much actual money you have to invest when you first purchase the fund). 

But the Fidelity 500 Index Fund (FXAIX) is, as I write this, cheaper than any S&P 500 ETF, both in terms of its 0.015% in annual expenses and its nonexistent investment minimum. Whatever your brokerage says is the lowest dollar amount you have to invest in anything is how little you need to get started in FXAIX. For most people, that's $1.

The S&P 500 Index is a collection of 500 of the largest American businesses, and a barometer of the American stock market. It's not a perfect representation, nor is it a perfect index. But the vast majority of fund managers who try to assemble similar baskets of large U.S. businesses struggle to beat the S&P 500 as a benchmark, so we might as well own it for as cheap as we can get it.

2. Vanguard Russell 2000 ETF

Fund type: ETF
Style: U.S. small-cap stock
Purpose: Core portfolio holding / Tactical holding
Expense ratio: 0.07%, or 70¢ per year for every $1,000 invested
Minimum initial investment: N/A

Investors looking for outsized growth have historically looked to smaller companies. The logic goes that it's easier to double your revenues from $1 million than it is to double them from $1 billion, and thus smaller stocks should have more potential for upside. However, they're far riskier investments than larger companies … and over the past decade, they've mostly underperformed bigger companies.

But Wall Street analysts have been broadly positive on diminutive firms as we enter 2026.

"Small caps faced numerous challenges entering '25, from tariff/Fed uncertainty to a still-elusive EPS recovery. But after turning more constructive in August, we are bullish on small caps in 2026, expecting small caps to outperform mid and large caps," says BofA Global Research analyst Jill Carey Hall, citing a long-awaited rebound in profits, continued Federal Reserve rate cuts, capital expenditures, the potential for lower tariffs, and more.

Young and the Invested Tip: Vanguard offers some of the market's fee-friendliest funds. You can check out our top picks for 2026 here.

The Vanguard Russell 2000 ETF (VTWO) is an index fund that tracks the best-known small-cap index: the Russell 2000, which includes 2,000 of the smallest securities in the U.S. equity market by market capitalization (price multiplied by outstanding shares). Like with most indexes, it's weighted by market cap, so the bigger the stock, the more effect that stock has on the fund. But even the fund's largest holdings account for less than 1% of assets apiece, so you're getting an extremely diversified portfolio with very little single-stock risk.

As is the case with many Vanguard ETFs, VTWO is one of the cheapest ways to own small-cap stocks. Like with all ETFs, there's no set minimum investment. The price of entry is the cost of a share—currently about $100—but if you have a fractional share brokerage, you might be able to start investing with $10, $5, or even $1.

3. MoA International Fund

Fund type: Mutual fund
Style: Developed-market stock
Purpose: Core portfolio holding
Expense ratio: 0.33%*, or $3.30 per year for every $1,000 invested
Minimum initial investment: $1,000

Many advisors will tell you it's important to diversify geographically, too. It's a little hedging of bets, sure—while U.S. stocks tend to outperform international equities, 2025 was a year in which the rest of the world outdid America. But also, there are hundreds of high-achieving companies scattered across the globe, and it makes sense to have a little exposure to those firms, too.

MoA International Fund (MAIFX) managers Jamie Zendel and Eric Lockenvitz have selected roughly 150 stocks across a number of "developed" markets—countries with well-established economies and safe, regulated stock markets, like those found in western Europe. For instance, Japan, the U.K., and France feature prominently in this portfolio.

Management uses quantitative models "focused on company valuation, earnings quality, and capital deployment," so while MAIFX does indeed fall within the value category, it still has some growth elements. Its top 10 holdings are a "who's who" of traditional international fund holdings, including German software firm SAP (SAP) and Swiss pharmaceutical names Novartis (NVS) and Roche (RHHBY).

 A good chunk of its returns come from an oversized dividend—international blue-chip dividend stocks tend to pay more than their U.S. counterparts, resulting in a 3%-plus yield that's nearly thrice what you'd collect from an S&P 500 fund.

The $1,000 minimum initial investment isn't nothing, but it's smaller than the ask from many of the major mutual fund providers.

* 0.48% gross expense ratio is reduced with a 15-basis-point fee waiver until at least April 30, 2026.

4. Fidelity Pacific Basin

Fund type: Mutual fund
Style: Pacific/Asia stock
Purpose: Tactical holding
Expense ratio: 0.87%, or $8.70 per year for every $1,000 invested
Minimum initial investment: None

Much like investors augment their core equity holdings with, say, large growth stocks or small-cap companies to generate outperformance, they also try to jazz up their core international holdings with region-specific funds.

And as Chinese and Japanese equities are among two of the more heralded international opportunities heading into 2026, the Fidelity Pacific Basin Fund (FPBFX) seems an appropriate mention.

FPBFX is an actively managed mutual fund that invests in stocks either located in, or tied economically to, the Pacific Basin. Co-Managers Kirk Neureiter and Stephen Lieu target companies with strong, stable growth characteristics, solid free cash flow, and focused management teams, among other traits.

Fidelity Pacific Basin is a mix of developed and emerging markets, with established Japan hoovering up the largest chunk of assets (31%), followed by China (26%), Taiwan (11%), and South Korea (10%). All told, you're getting exposure to more than a dozen countries, including a small peppering of U.S. exposure. (Remember: Holdings can merely be "tied economically" to the Pacific Basin's fortunes.) There aren't many funds in its category, but Pacific Basin has been among the top 4%-5%, and clobbered its category average, over every meaningful time frame.

It's still one of the most expensive Fidelity funds we talk about in terms of fees, but its 0.87% expense ratio is well below the 1.10% Morningstar Category average fee for diversified Asian/Japanese funds. And like many other Fidelity mutual funds, it has no minimum initial investment.

Young and the Invested Tip: If you want Fidelity quality for even less, here's a look at the company's top index funds for 2026.

5. iShares MSCI USA Min Vol Factor ETF

Fund type: ETF
Style: U.S. minimum-volatility stock
Purpose: Defensive holding
Expense ratio: 0.15%, or $1.50 annually on a $1,000 investment
Minimum initial investment: N/A

Market volatility usually goes hand-in-hand with big drops in stocks. So, naturally, low- and min-volatility ETFs are considered a smart way to hedge against a downward swing in the market.

But to understand what the iShares MSCI USA Min Vol Factor ETF (USMV) does, you need to know the difference between "low volatility" and "minimum volatility." Because while both are designed to reduce volatility, they do so in starkly different ways:

• Low-volatility funds simply hold the lowest-volatility stocks within their selection universe.
• Minimum-volatility funds try to create the lowest-volatility portfolio possible, even if doing so involves owning some volatile stocks. (How would that work? If you own several stocks that are volatile, but whose performances aren't really correlated with one another, they could balance each other out to an extent, creating a portfolio that overall doesn't exhibit much volatility.)

The iShares MSCI USA Min Vol Factor ETF holds 170 U.S. stocks that, from a sector perspective, are pretty similar in balance to its underlying index (the MSCI USA Index) and even the S&P 500, but exhibit much less volatility as a whole. As I write this, it trades around $94 per share.

"We really like the iShares min-vol ETFs," says Daniel Sotiroff, Senior Analyst for ETF and Passive Strategies at Morningstar. "If you want just a defensive equity portfolio, those are pretty good to go with. They consistently show up when you go into a drawdown and perform how you would expect."

Just heed Sotiroff's warnings about the other edge of the low-/min-vol sword: "When the market just keeps going higher and higher, they don't look all that great. Some people don't understand there's a tradeoff—you're not going to participate [as much] in the upside. So they're very good as defensive ETFs, but that's also their shortfall."

6. JPMorgan Active Bond ETF

Fund type: ETF
Style: Intermediate core bond
Purpose: Defensive holding / Tactical holding
Expense ratio: 0.25%, or $2.50 annually on a $1,000 investment
Minimum initial investment: N/A

If you don't know much about bonds, you can get caught up with our primer on bond funds. But in short: You can invest in debt issued by governments, companies, and other entities; that debt does have a little potential to gain in value, but its primary benefit is the (usually) fixed level of income it produces.

You typically won't allocate much of your core portfolio to bonds when you're young, but you'll increasingly want exposure the closer to retirement you get. And at certain times—particularly when interest rates are expected to decline (lower rates translate into lower yields on newly issued bonds, which raises the value of existing, higher-yielding bonds)—bonds can be an attractive tactical holding.

For instance, right now, "the Fed is reducing rates and investors are looking to support higher income," says Jon Maier, Chief ETF Strategist, Managing Director, JPMorgan Asset Management. "Investors are trying to move a little bit out on the duration spectrum to pick up the yield they're not receiving on the short end of the curve."

While many people think of ETFs as only being index funds, a small but growing percentage of ETFs are actively managed, including the JPMorgan Active Bond ETF (JBND). This fund's managers focus on higher-quality, intermediate-term debt, and unlike an index fund that has to operate within specific parameters even to its detriment, management is free to take on greater or lesser risk depending on the market environment.

Currently, JBND owns about 1,400 holdings, including agency debt, Treasuries, and investment-grade corporates. You can buy the fund for around $54 per share currently … or again, less if your broker allows for fractional shares. It has an SEC yield (an annualized number that reflects interest earned across the most recent 30-day period) of 4.4%.

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Thanks for sticking with us for another year! We'll continue trying to deliver financial insights and analyses that make a difference in your life.

Riley & Kyle

Young and the Invested

Disclaimer: This article does not constitute individualized investment advice. Securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

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