Have a 401(k)? Ask HR About These Funds

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NEW YORK ( TheStreet) -- Mutual funds leave a lot to be desired. Many charge excessive fees , underperform the stock market as a whole and generate big tax bills, leaving the investor with few gains . And, unfortunately, the mutual funds available to investors via 401(k) plans can be worse than average.

Depending on your employer and 401(k) plan sponsor, you may be able to add new mutual funds to your menu of investment choices with relative ease . (Talk to your human resources (HR) representative about what's possible.)

Alternatively, some companies allow employees to opt into "self-directed" 401(k)s , which may allow for a larger selection of mutual funds via a linked brokerage account.

Assuming your company is willing to add new mutual funds to its 401(k) roster, most investors would be best served by asking for the lowest-cost S&P 500 index fund available .

Let's say your existing plan includes an S&P 500 index fund that charges 0.45% in fees. If you can replace it with the Vanguard Institutional Index fund (VINIX) , which requires a $5 million investment (a reasonable amount for companies with many 401(k) participants), you would save 91% in fund expenses. That's right, the institutional Vanguard fund tracks the S&P 500 for only 0.04% in expenses.

The same logic also applies to finding the lowest-cost bond index fund or a balanced fund (which contains stocks and bonds). The less you pay, the more you keep.

If your company is reluctant to add index funds to its 401(k) choices ( sadly, that may be the case ), perhaps you can campaign for time-tested funds with a better track record than actively managed peers (specifically, funds that have consistently bested the market). On the plus side, one benefit to holding actively managed mutual funds in your 401(k) is that you're shielded from the tax bills that often come as a result of high portfolio turnover (the frequency at which the mutual fund manager sells stocks).

The mutual funds appearing below have passed four stringent criteria:

  • Each fund has received an A+ rating from TheStreet Ratings' mutual fund division .
  • Each fund has also garnered a 5-star rating (the highest) from Morningstar. (It never hurts to get a second opinion.)
  • Each fund has existed for at least a decade, and as of December 2012, has outperformed the S&P 500 over the past 10 years.
  • Each fund has at least one investment manager whose tenure predates the 2008 financial crisis.

As always, mutual fund ratings shouldn't be treated as gospel. Rather, use them as a starting point for your own research.

Also, please note that some of the mutual funds below have a minimum investment of millions of dollars. Smaller companies and individual investors may not meet the requirements for these funds. Similarly, conflicts between fund families and 401(k) sponsors may preclude your ability to invest in these funds through your corporate investment plan. However, you may still be able to invest in some of these funds in your IRA or taxable account should you wish to:

Delaware Pooled Large-Cap Value Equity (DPDEX)