The Top 4 Mainstay Funds for Retirement

What Are MainStay Funds?

MainStay Funds are a series of mutual funds offered by a subsidiary of New York Life Insurance Company, New York Life Investments. New York Life Insurance is one of the country’s largest and oldest financial services firms. The company opened MainStay mutual funds in 1985 to individual retail investors and financial advisors.

This group of mutual funds provides investors with portfolio management in equities, fixed income, multi-asset, money market, and other investment solutions. Fund strategies range from long-term growth, income generation, managing volatility, fighting inflation, tax efficiency, and retirement planning.

The following four MainStay mutual funds are well-suited for those who want to create a diverse portfolio for retirement savings or for anyone exploring their options. Keep reading to find out more about these funds and how they rank. All of the returns listed are based on the net asset value (NAV) of the fund’s Class A shares.

MainStay Balanced Fund (MBNAX)

• Inception: Jan. 2, 2004
• Morningstar Rating: Three-star
• Minimal Initial Investment: $15,000
• Annual Fund Operating Expenses: 1.09%

The MainStay Balanced Fund (MBNAX) seeks to provide a total return through a combination of growth and current income. The fund consists of a mixed portfolio of equity securities and fixed income securities. As of Sept. 30, 2021, the fund allocated about 63.6% in common stocks and the remainder in fixed income securities, ETFs, and cash.

The fund had 240 holdings as of Sept. 30, 2021, representing a total of $488 million in net assets. The top five sectors were financials (23.1%), consumer—non-cyclical (16.5%), government (13.1%), industrials (9%), and communications (8%). The top holdings as of this date were:

• United States Treasury Notes, 0.375%, due 09/15/2024 (4.2%)
• iShares Intermediate Government/Credit Bond ETF (3%)
• JPMorgan Chase (2.6%)
• United States Treasury Notes, 0.875%, due 09/30/2026 (2.3%)
• United States Treasury Notes, 0.250%, due 09/30/2023 (2%)

The fund tracks the performance of the Russell 1000 Value Index but is underperforming its benchmark. It returned 10.73%, 22.29%, and 9.25% on a year-to-date (YTD), one-year, and 10-year basis, compared to the underlying index’s returns of 16.14%, 35.01%, and 10.07% during the same periods. Dividends are paid every quarter. Distribution rates at NAV were 0.03% as of Dec. 31, 2021.

MainStay Income Builder Fund (MTRAX)

• Inception: Jan. 3, 1995
• Morningstar Rating: Four-star
• Minimal Initial Investment: $15,000
• Annual Fund Operating Expenses: 1.03%

The MainStay Income Builder Fund (MTRAX) is a Morningstar four-star rated fund that aims to seek current income for capital and income growth. MTRAX is comprised of a mixture of stocks, fixed income assets, cash, and asset-backed securities.

MTRAX has a portfolio that consists of 547 holdings totaling $1.6 billion in net assets. The top five sectors as of Sept. 30, 2021, were financials (19.5%), consumer—non-cyclical (13.4%), mortgage securities (9.4%), consumer—cyclical (9.1%), and technology (8.6%). The top five holdings as of that date were:

• Microsoft (1.1%)
• Apple (1%)
• United States Treasury Notes, 0.125%, due 01/31/2023 (1%)
• Analog Devices (1%)
• Broadcom (0.9%)

The fund’s benchmark index is the MSCI World Index. MTRAX has consistently underperformed the index, returning 5.94%, 14.87%, and 8.87% compared to the underlying index’s returns of 13.04%, 28.82%, and 12.68% on a YTD, one-year, and 10-year basis. Dividends are paid to investors every month while distribution rates as of Dec. 31, 2021, at NAV were 2.62%. The fund is an excellent investment for a Roth IRA account that shields the entire yield from federal income taxes.

MainStay MacKay S&P 500 Index Fund (MSXAX)

• Inception: Jan. 2, 2004
• Morningstar Rating: Four-star
• Minimal Initial Investment: $15,000
• Annual Fund Operating Expenses: 0.54%

The MainStay MacKay S&P 500 Index Fund (MSXAX) is a passively managed fund that seeks to match the total return of the Standard & Poor’s (S&P) 500 Index.

The fund accomplishes its investment goals through a portfolio composed of stocks and cash—98.4% and 1.6%, respectively. There were 505 holdings representing $1.3 billion in net assets. Information technology (27.2%), healthcare (13.1%), consumer discretionary (12.2%), financials (11.2%), and communication services (11.1%) were the top five sectors as of Sept. 30, 2021. The following companies were the top five holdings:

• Apple (6%)
• Microsoft (5.7%)
• Alphabet (4.2%)
• Amazon (3.9%)
• Meta (formerly Facebook) (2.2%)

As mentioned above, this fund tracks the S&P 500. Investors receive increased diversity as they own a fractional interest in each of the 500 largest publicly traded corporations in the United States. MSXAX returned 15.48%, 29.34%, and 16%, compared to the benchmark’s returns of 15.92%, 30%, and 16.63% on a YTD, one-year, and 10-year basis. Dividends are paid annually and the fund has a distribution rate of 0.89%.

MainStay MacKay Convertible Fund (MCOAX)

• Inception: Jan. 3, 1995
• Morningstar Rating: Three-star
• Minimal Initial Investment: $15,000
• Annual Fund Operating Expenses: 0.96%

The MainStay Convertible Fund (MCOAX) adds additional diversity to an investment portfolio by choosing a unique class of securities. Convertible securities are instruments such as bonds, preferred stock, or corporate debt that are convertible into a corporation’s common stock while paying interest or dividends to the fund. 

Fund managers take into account the stability of a firm’s financials and the growth potential of its common stock. The convertibility option positions the fund to take extra advantage of a rising stock market. Convertibility also protects investors in fixed-income securities during periods of rising interest rates, as convertible securities hold their value better than other fixed-income assets.

The fund’s net assets were $1.9 billion as of Sept. 30, 2021. There were 127 holdings, which spanned a variety of sectors. Among them, the top five were consumer—non-cyclical (23.2%), technology (18.3%), communications (18.2%), energy (10.1%), and consumer—cyclical (9.8%). The top five holdings as of this date were:

• Danaher Corporation Convertible Preferred Series A (3.7%)
• Nice, 0.000%, due 09/15/2025 (2.8%)
• Chart Industries, 1.000%, due 11/15/2024 (2.3%)
• Pioneer Natural Resources, 0.250%, due 5/15/2025 (2.2%)
• Southwest Airlines, 1.250%, due 05/01/2025 (2.1%)

The fund’s benchmark index is the ICE BofA US Convertible Index, which it has generally underperformed. The fund returned 7.13%, 26.81%, and 12.86% compared to the index, which returned 6.37%, 27.30%, and 14.37% on a YTD, one-year, and 10-year basis respectively. MCOAX pays dividends on a quarterly basis and its distribution rate is 0.0% as of Dec. 31, 2021.

The Bottom Line

Having a retirement plan in place is something everyone should consider, even if you just put aside a few bucks a month. You can choose from a variety of different investment options based on your financial position, age, personal situation, budget, and long-term goals.

But you should review your portfolio regularly to ensure you’re getting the best possible returns. Keep in mind that the mutual funds we’ve outlined above are merely suggestions to help guide you on your way. Make sure you consult with a qualified financial professional before you make any decisions.

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