The best American Mutual Funds of 2007

“Money” magazine put out its picks for the top mutual funds for this year. It included eleven large-cap, seven mid-cap, four small-cap, three multi-cap, three specialty funds, eight foreign, and seven bond funds. The “Chicago Tribune,” in their May 24th edition, put out their top 25 funds for 2007. Personally, I would go to Morningstar ( for my best American mutual funds. Morningstar has a solid track record of rating mutual funds for many years.

Did you know that there are more mutual funds than there are stocks on the New York Stock Exchange? And you want to pick the best of those? But the best for what? Mutual funds are nearly as diverse as individual stocks. The best fund for you and your current needs is not necessarily the best fund for me and my current needs. Are you looking for income or for long-term growth? Are you looking for a high return with high risk or a safer fund that may have small but more dependable returns?

The problem with any “best of” list is that it is going to be very subjective and there may be many funds that are completely ignored because they aren’t highly visible. The same is true of stocks or certain industries. For example, there is very little talk of precious metals in terms of stocks or funds. And yet, it has been one of the fastest growing industries on the stock market, blowing away the Dow-Jones, Nasdaq, and the others as well. But it is invisible to the folks who are doing all of the evaluating.

I have a Fidelity precious metal fund that I have had for at least five years. This fund is at 0.63% year-to-date in 2007. Not very good! But it gained 25.93% over the past three years and 16.05% over the past five years. In 2004 it lost 9.8% but it gained 32.1% in ’03, 40.7% in ’05, and 25.4% in ’06. These kinds of gains would blow away many of the funds on the top funds lists of the big shot investing experts.

That’s why you need to make your own best mutual funds list and you need to look at the industries that are actually making spectacular gains, such as commodities, energy, and base and precious metals. It’s a mistake to think that all of the experts in investing actually know what they’re doing. In some cases, they are touting funds for companies they work for.

The best American mutual funds of 2007 are the ones that will best fill your specific needs and will give you the returns you need with a risk level you can afford.