Which mutual funds beat the S&P 500?
Rowe Price U.S. Equity Research fund (ticker: PRCOX) is in this exclusive club, having bested—along with a team of about 30 research analysts—the S&P 500 index for the past five years on an annualized basis. U.S. Equity Research is a Morningstar five-star gold-medal fund.
Rowe Price U.S. Equity Research fund (ticker: PRCOX) is in this exclusive club, having bested—along with a team of about 30 research analysts—the S&P 500 index for the past five years on an annualized basis. U.S. Equity Research is a Morningstar five-star gold-medal fund.
In the trailing five-, 10-, 15-, and 20-year periods, the Vanguard Growth ETF (NYSEMKT: VUG) has outperformed the S&P 500. That is a remarkable track record. And it's a long-enough time horizon to have confidence that this streak can continue in the years ahead.
Focused funds | 5-year-return (%) | Benchmark index (%) |
---|---|---|
360 ONE Focused Equity Fund | 22.21 | 17.61 |
Franklin India Focused Equity Fund | 18.03 | 17.45 |
HDFC Focused 30 Fund | 18.96 | 17.45 |
ICICI Prudential Focused Equity Fund | 19.04 | 17.61 |
Index fund | Minimum investment | Expense ratio |
---|---|---|
Vanguard 500 Index Fund - Admiral Shares (VFIAX) | $3,000. | 0.04%. |
Schwab S&P 500 Index Fund (SWPPX) | No minimum. | 0.02%. |
Fidelity 500 Index Fund (FXAIX) | No minimum. | 0.015%. |
Fidelity Zero Large Cap Index (FNILX) | No minimum. | 0.0%. |
Vanguard Growth & Income Fund (VGIAX)
VGIAX's one-two punch of investment goals helped it beat the overall stock market in 2022 and 2023. Over the past 10 years, this fund's average annual return is about even with the S&P 500. Likewise, its trailing 12-month dividend yield approaches the broad market's.
I put my personal 401(k) and a lot of my mutual fund investing in four types of mutual funds: growth, growth and income, aggressive growth, and international.
Unfortunately, most fund managers fail to outperform their benchmark index in any given year. In 2021, 79% of fund managers underperformed the S&P 500. Picking the funds and managers that will outperform is practically impossible for investors since none has a consistent record of outperforming year after year.
The one time it's okay to choose a single investment
That's because your investment gives you access to the broad stock market. Meanwhile, if you only invest in S&P 500 ETFs, you won't beat the broad market. Rather, you can expect your portfolio's performance to be in line with that of the broad market.
Five large cap mutual funds that gave the highest return in the past 10 years are Nippon India Large Cap Fund which gave 17.09% returns, followed by Mirae Asset Large Cap Fund with 16.99% return. The other three are ICICI Prudential Bluechip Fund, SBI Bluechip Fund and HDFC Top 100 Fund.
Which mutual fund has the highest return in the last 5 years?
Fund Name | 3 Years Return | 5 Years Return |
---|---|---|
Quant Active Fund (G) | 26.3% | 27.7% |
Quant Multi Asset Fund (G) | 29.9% | 26.8% |
ICICI Prudential Infrastructure Fund (G) | 38.4% | 26.0% |
DSP Healthcare Fund (G) | 20.1% | 25.8% |
- HDFC Index S&P BSE Sensex Fund. ...
- Tata S&P BSE Sensex Index Fund. ...
- Axis Nifty 100 Index Fund. ...
- HSBC Nifty 50 Index Fund. ...
- Mirae Asset NYSE FANG+ ETF FoF. ...
- Mirae Asset Equity Allocator FoF. ...
- Motilal Oswal Nifty Midcap 150 Index Fund. ...
- Motilal Oswal Nifty Next 50 Index Fund.
Some of the disadvantages of active large-cap funds are:
They have higher tracking errors than index funds, which means they may deviate significantly from the index performance due to their stock selection or portfolio allocation.
MarketWatch spotlights VanEck Morningstar Wide Moat ETF (MOAT), consistently outperforming the S&P 500 by targeting companies with long-term competitive advantages or "economic moats."
- Fidelity 500 Index Fund (FXAIX).
- Fidelity Total Market Index Fund (FSKAX).
- Schwab S&P 500 Index Fund (SWPPX).
- Schwab Total Stock Market Index Fund (SWTSX).
- Vanguard 500 Index Fund Admiral Shares (VFIAX).
- Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX).
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
Vanguard's trading platform isn't as robust as other stock trading platforms from trading-first brokers. If you regularly move in and out of stocks or like to make complex options trades, Vanguard is probably not the best choice for you.
Vanguard Fund | Expense Ratio |
---|---|
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) | 0.04% |
Vanguard Explorer Fund Investor Shares (VEXPX) | 0.45% |
Vanguard Long-Term Treasury Index Fund Admiral Shares (VLGSX) | 0.07% |
Vanguard Mid Cap Growth Fund (VMGRX) | 0.37% |
No. 1 on the list is the ProFunds Semiconductor UltraSector Fund, which yielded 29.21% over the past decade. In second place is the Direxion Monthly NASDAQ-100 Bull 1.75X Fund, with 28.16%. And the bronze medal goes to the Rydex NASDAQ-100 2x Strategy Fund, which yielded 26.58%.
Why are mutual funds the only investment option Ramsey Solutions recommends? Well, we like mutual funds because they spread your investment across many companies, and that helps you avoid the risks that come with investing in single stocks and other “trendy” investments (we're looking at you, Dogecoin).
What is the 3 5 10 rule for mutual funds?
Specifically, a fund is prohibited from: acquiring more than 3% of a registered investment company's shares (the “3% Limit”); investing more than 5% of its assets in a single registered investment company (the “5% Limit”); or. investing more than 10% of its assets in registered investment companies (the “10% Limit”).
Citadel, which ranked second in 2023, made $8.1 billion in profits after bringing in a record-breaking $16 billion in 2022. Its $74 billion in gains since inception rank it as the most successful hedge fund in history.
A target-date fund is generally a "fund of funds," meaning that the investor is paying an extra layer of fees. Those additional fees could make the fund's actual return compare unfavorably to other options for a retirement portfolio, such as an S&P 500 Index Fund.
Index funds offer lower fees and tax efficiency. Due to their passive nature, they often perform in line with market benchmarks, making them suitable for investors seeking broad market exposure at lower costs. On the other hand, active mutual funds aim to outperform the market by employing active management strategies.
Moreover, the S&P 500 is just one piece of the investment puzzle. Diversification is key to any successful investment strategy, and putting all of your eggs in one basket is never a good idea.
References
- https://www.nasdaq.com/articles/dave-ramsey%3A-how-do-i-invest-15-for-retirement
- https://www.nasdaq.com/articles/the-most-popular-u.s.-large-cap-indices-2020-09-30
- https://corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/sets-us-apart/index.html
- https://www.trackinsight.com/en/education/history-of-etfs
- https://dailyinvestor.com/world/32751/the-worlds-oldest-bond-still-paying-interest-375-years-later/
- https://en.wikipedia.org/wiki/Mutual_fund
- https://www.nasdaq.com/articles/what-are-the-three-most-quoted-u.s.-stock-indexes
- https://www.etmoney.com/mutual-funds/featured/best-index-funds/12
- https://www.investopedia.com/terms/r/ruleof72.asp
- https://www.moneycontrol.com/news/photos/business/personal-finance/how-have-indias-oldest-mf-schemes-rewarded-the-investors-11426981.html
- https://finance.yahoo.com/personal-finance/can-you-lose-money-in-money-market-account-182341738.html
- https://www.thestreet.com/investing/funds/mutual-funds/oldest-mutual-funds
- https://www.livemint.com/mutual-fund/mf-returns-these-6-focused-mutual-funds-beat-the-benchmark-index-in-the-past-5-years-11706100724789.html
- https://www.forbes.com/profile/edward-johnson/
- https://investor.vanguard.com/investment-products/mutual-funds/profile/vwelx
- https://www.investopedia.com/articles/investing/110515/who-are-owners-vanguard-group.asp
- https://fundselectorasia.com/10-funds-that-beat-the-sp-500-by-over-20-in-2023/
- https://www.statista.com/statistics/255590/number-of-mutual-fund-companies-in-the-united-states/
- https://www.forbes.com/advisor/in/investing/best-index-funds-in-india/
- https://www.quora.com/Is-it-a-good-idea-to-invest-all-of-your-savings-into-an-S-P-500-Index-Fund-at-this-time-considering-the-current-record-highs
- https://en.wikipedia.org/wiki/Dow_Jones
- https://www.fool.com/the-ascent/buying-stocks/vanguard-brokerage-review/
- https://financhill.com/blog/investing/what-stocks-does-suze-orman-recommend
- https://www.livemint.com/mutual-fund/your-question-answered-what-is-the-difference-between-active-and-index-large-cap-mutual-funds-investments-11707900914678.html
- https://time.com/personal-finance/article/best-index-funds/
- https://www.ramseysolutions.com/retirement/daves-investing-philosophy
- https://en.wikipedia.org/wiki/SPDR_S%26P_500_Trust_ETF
- http://advisor.morningstar.com/uploaded/pdf/Alt_Managed-Category.pdf
- https://www.rl360.com/row/news/fund-update-old-mutual-namechanges-oct18.htm
- https://baronandgrant.com/why-investment-trusts/history-of-investment-trusts/
- https://www.fundguard.com/100-years-of-mutual-funds/
- https://twitter.com/DaveRamsey/status/1740392947818905964
- https://www.fool.com/investing/how-to-invest/index-funds/index-funds-vs-mutual-funds/
- https://abcnews.go.com/Business/wireStory/major-us-stock-indexes-fared-monday-3252024-108480756
- https://www.nerdwallet.com/article/investing/vanguard-index-funds
- https://money.usnews.com/investing/articles/best-vanguard-funds-for-retirement
- https://www.morningstar.com/funds/how-largest-bond-funds-did-2023
- https://finance.yahoo.com/news/vanguard-p-500-etf-voo-112006029.html
- https://www.usatoday.com/money/blueprint/investing/best-sp-500-etfs/
- https://www.unionbankofindia.co.in/english/union-asset-management.aspx
- https://www.usatoday.com/money/blueprint/investing/best-mutual-funds/
- https://etfdb.com/compare/market-cap/
- https://www.nirmalbang.com/knowledge-center/mutualfund-evolution-in-india.html
- https://www.investopedia.com/articles/mutualfund/05/mfhistory.asp
- https://www.nasdaq.com/WhichNDXETFisRightforYou
- https://www.financial-planning.com/list/profunds-direxion-rydex-mutual-funds-with-the-best-10-year-returns
- https://www.mutualfundssahihai.com/en/what-happens-when-mutual-fund-company-shuts-down-gets-sold
- https://www.bankrate.com/investing/best-etfs/
- https://m.economictimes.com/mf/analysis/95-mid-cap-schemes-fail-to-beat-benchmarks-in-seven-years/articleshow/107476347.cms
- https://www.investopedia.com/insights/introduction-to-stock-market-indices/
- https://www.fool.com/investing/2023/06/25/if-you-invested-10000-in-the-sp-500-20-years-ago/
- https://www.statista.com/statistics/278303/number-of-mutual-funds-worldwide/
- https://www.elibrary.imf.org/view/book/9781589069275/CH001.xml
- https://www.techopedia.com/who-owns-the-most-blk-stock
- https://en.wikipedia.org/wiki/Index_fund
- https://www.cnbc.com/2023/01/23/the-first-etf-is-30-years-old-this-week-it-launched-a-revolution-in-low-cost-investing.html
- https://www.ici.org/viewpoints/24-view-mf100-celebration
- https://www.amfiindia.com/investor-corner/knowledge-center/history-of-MF-india.html
- https://www.insurance.pa.gov/Companies/IndustryActivity/Documents/ONEBEACON%20CUMULATIVE%20LOG/102.pdf
- https://www.moneycontrol.com/news/business/mutual-funds/-1830967.html
- https://www.forbes.com/advisor/retirement/best-vanguard-mutual-funds/
- https://www.forbes.com/advisor/retirement/best-total-bond-market-index-funds/
- https://www.ssga.com/us/en/intermediary/etfs/capabilities/spdr-core-equity-etfs/spy-sp-500
- https://www.investopedia.com/articles/investing/031816/aivsx-overview-investment-company-america-fund.asp
- https://www.nerdwallet.com/article/investing/types-of-mutual-funds
- https://www.bankrate.com/investing/worlds-largest-mutual-funds/
- https://scripbox.com/mf/will-mutual-fund-investment-drop-to-zero-ever/
- https://investor.vanguard.com/investor-resources-education/retirement/income-make-the-most-of-retirement
- https://www.amazon.com/Retire-Wellington-Fund-Successful-Sustainable/dp/B08LNN5FB9
- https://www.cnbc.com/2024/01/23/worlds-largest-hedge-funds-record-bumper-year-of-profits.html
- https://en.wikipedia.org/wiki/S%26P_500
- https://www.mfs.com/en-us/individual-investor/about-mfs/our-history.html
- https://m.economictimes.com/mf/mf-news/lt-finance-buys-fidelitys-mutual-fund-business-in-india/articleshow/12434059.cms
- https://www.livemint.com/money/personal-finance/5-top-performing-large-cap-mutual-funds-in-the-past-10-years-11697191429395.html
- https://www.barrons.com/articles/fund-beats-s-p-500-secret-545c8e7e
- https://etfdb.com/compare/highest-5-year-returns/
- https://en.wikipedia.org/wiki/Gold_exchange-traded_product
- https://www.federalreserve.gov/pubs/bulletin/2000/1200lead.pdf
- https://www.fool.com/the-ascent/buying-stocks/articles/heres-what-happens-when-you-only-invest-in-sp-500-etfs/
- https://finance.yahoo.com/news/more-money-investing-10-000-220010726.html
- https://m.economictimes.com/mf/mf-news/dear-mutual-funds-happy-100th-birthday/articleshow/108683566.cms
- https://en.wikipedia.org/wiki/Fidelity_Investments
- https://www.mfs.com/en-us/individual-investor/about-mfs/our-history/first-fund-the-origins-and-legacy-of-massachusetts-investors-trust.html
- https://www.nerdwallet.com/article/investing/sp-500-index-fund
- https://timesofindia.indiatimes.com/business/faqs/mutual-fund-faqs/mutual-fund-risks-can-all-money-be-lost-in-a-mutual-fund/articleshow/67638471.cms
- https://www.blackrock.com/corporate/literature/whitepaper/eng-blackrock-worldwide-leader-in-asset-and-risk-management.pdf
- https://www.nasdaq.com/articles/you-can-do-better-than-the-sp-500.-buy-this-etf-instead.
- https://en.wikipedia.org/wiki/Fidelity_Magellan_Fund
- https://www.investopedia.com/articles/investing/100815/3-biggest-mutual-fund-companies-us.asp
- https://www.investopedia.com/articles/investing/011516/targetdate-funds-vs-sp-500-indexing.asp
- https://www.investmentfundlawblog.com/resources/investments-by-funds/investments-investment-companies/
- https://www.investopedia.com/terms/m/marketindex.asp
- https://www.investopedia.com/ask/answers/08/oldestmutualfunds.asp
- https://scripbox.com/mutual-fund/highest-return-mutual-fund-in-last-5-years
- https://www.vaneck.com/us/en/blogs/moat-investing/decade-of-dominance-the-etf-that-quietly-beats-the-s-and-p-500/
- https://www.ssga.com/us/en/intermediary/etfs/insights/how-spy-reinvented-investing-story-of-first-us-etf
- https://www.forbes.com/sites/investor-hub/article/index-fund-vs-mutual-funds/
- https://corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/sets-us-apart/our-history.html
- https://www.guinnessworldrecords.com/world-records/549529-oldest-active-bond
- https://www.sec.gov/investor/pubs/sec-guide-to-mutual-funds.pdf