We recently compiled a list of the 10 Fastest Growing Mutual Funds in 2025. In this article, we are going to take a look at where Fidelity Contrafund (NASDAQ:FCNTX) stands against the other mutual funds.
It was a banner year for equity mutual funds as most outperformed, as the overall market climbed to record highs. Actively managed mutual funds with exposure to large-cap stocks stood out owing to the aggressive investment strategies that took advantage of emerging opportunities. The funds were up by an average of 30%. The outperformance came as big techs in the US posted double-digit gains in response to the artificial intelligence theme that drove markets to record highs.
Mutual funds with significant exposure to large-cap stocks, especially those with exposure to artificial intelligence, were some of the big winners. The mutual funds rose as a result of both better-than-expected US economic growth and ongoing excitement about the potential of artificial intelligence. On the other hand, mutual funds with exposure to small-cap stocks lagged the overall market as the focus remained on large-cap stocks, which delivered impressive financial results while backed by solid underlying fundamentals.
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After accounting for fees, data shows that the average actively managed mutual funds have returned 20% over the last year and 13% annually over the previous five years. Comparable passive funds have provided 14% and 23% returns, respectively. These active funds had an annual expense ratio of 0.45%, which was nine times greater than the benchmark-tracking funds’ equivalent of 0.05%.
Adam Benjamin, the 53-year-old who took charge of Boston-based Fidelity’s Select Semiconductors Portfolio mutual fund, continued to top the chart as one of the best-performing mutual fund managers. Benjamin came out on top for the second year in a row as his fund outperformed the 431 mutual or exchange-traded funds, producing a 49% return.
Amid the impressive performance, the emergence of exchange-traded funds with buzzy investment themes increasingly encroaches on the mutual funds landscape. A record number of mutual funds to ETF conversion last year underscored how ETFs are becoming increasingly popular at the expense of mutual funds.
The trend is expected to continue, with strategists at Bank of America foreseeing 400 mutual funds with $320 billion in assets converting into ETFs.
“Several fund providers needed to see proof of concept before they initiated their own conversions,” said Ryan Jackson, senior manager research analyst for Morningstar Research Services. “In many cases, the benefits of the ETF structure do more good than harm for investors.”
A change of tact was the catalyst behind investors pulling a record $450 billion out of actively managed mutual funds last year. While the pullout could be attributed to investors opting to lock in gains, a shift into cheaper index-tracking investment appears to be taking shape in the asset management industry. The withdrawals from stock-picking mutual funds also demonstrate the increasing popularity of exchange-traded funds (ETFs), which are listed on a stock exchange and provide many investors with more flexibility and US tax benefits.
The performance of traditional mutual funds has lagged behind the gains of Wall Street indices driven by large technology stocks, making it difficult for them to justify their comparatively high fees. As younger savers shift to less expensive passive strategies and older investors, who usually favor active strategies, cash out, the exodus from active strategies has accelerated.
“People need to invest to retire and at some point they have to withdraw,” said Adam Sabban, a senior research analyst at Morningstar. “The investor base for active equity funds skews older. New dollars are much more likely to make their way into an index ETF than an active mutual fund.”
Despite the growing conversions, mutual funds still remain a unique investment vehicle for investors eyeing diversified exposure in the market at some of the lowest fees. Low-fee, actively managed mutual funds are becoming increasingly popular owing to their ability to respond adequately to changing market sentiments and tweak holdings, therefore taking advantage of unique investment opportunities.
Our Methodology
To make the 10 fastest growing mutual funds in 2025 we scanned the US market and settled on the top funds with an impressive record of returns. We then analyzed the funds focusing on why they stand out as the fastest growing mutual funds in 2025 and the investment strategy deployed by fund managers. Finally, we ranked the funds in ascending order based on their year to date return (as of February 17).
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A financial advisor with a client discussing the merits of a mutual fund, showing the company’s experienced advice in asset management.
Fidelity Contrafund (NASDAQ:FCNTX)
Ten year Gain: 15.88%
Year to Date Gain: 8.22%
Fidelity Contrafund (NASDAQ:FCNTX) is one of the fastest-growing mutual funds, with an 8.22% gain year to date. Additionally, the fund has generated an average return of 15.88% over the past ten years. The fund has produced an alpha of 2.9% annually over the S&P 500, outperforming its benchmark in 24 of the last 32 years. Its competitive edge stems from relying on growth-oriented strategies that focus on companies with underappreciated earnings potential. Therefore, it invests in undervalued companies based on earnings with the prospects of rallying.
Additionally, mutual funds are highly diversified by investing in companies stocks in various sectors as one of the ways of spreading the risk. While it invests in about 3000 companies, it isn’t very objective toward large-cap growth companies that command a competitive edge in their respective fields with tremendous opportunities for growth. Fidelity Contrafund’s (NASDAQ:FCNTX) in-house research methodology has regularly spotted up-and-coming growth leaders early. This includes key positions in Meta and Nvidia prior to their huge runs.
Overall FCNTX ranks 1st on our list of the fastest growing mutual funds in 2025. While we acknowledge the potential of FCNTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FCNTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.