Top-Performing Mutual Funds for 10 Years

It was an awful run for stocks in 2022 as inflationary pressures, deteriorating economic conditions, and interest rate hikes rattled investor sentiments. The S&P 500 was on the brink of plunging into bear territory after declining 19.4%. Investors who had sought refuge in low-cost mutual funds were not spared, as most of the funds underperformed amid the steep sell-off in the market.

While a majority of the mutual funds underperformed the S&P 500, some larger cap active mutual funds outperformed owing to their aggressive stock-picking strategies. Actively managed funds performed much better as they strived to outperform benchmark indexes by leveraging the experience of professional fund managers in stock picking.

Active funds outperformed passive funds because fund managers went long on some tech plays that continued to outperform the overall market. The likes of Tesla, Meta Platforms, Nvidia, and Alphabet remained resilient, helping uplift most funds.

Active mutual funds outperforming the overall market came as a surprise, given that they have been experiencing sustained outflows since 2010. On the other hand, expectations are high that passively managed funds will make up a majority of US fund assets by 2025.

Even as most of the actively managed funds failed to beat the S&P 500, they underperformed less badly than the previous years. Therefore, it’s become increasingly clear that it’s difficult for fund managers to beat the indexes over 10-to-20-year periods.

Between 2010 and 2011, between 55% and 87% of actively managed funds could not beat the S&P 500. However, in 2022 only 51% of the large-cap stocks funds failed to beat the index, which was a significant improvement.

Fast forward, sentiments have improved significantly in the equity markets, with most indexes posting double-digit gains. The gains come from improved economic conditions, a pause in aggressive interest rate hikes, and improved prospects of the US economy avoiding recession.

Likewise, some of the large-cap stocks that make up for the biggest share of many large-cap mutual funds holdings are already up by double-digit gains helping propel many mutual funds higher. The likes of Meta Platforms, Nvidia, and Tesla are already up by more than 100% over the past six months.

As more investors look for ways to diversify their holdings or investment portfolio, mutual funds have emerged as a preferred investment vehicle. Consequently, the global Mutual Funds market is expected to grow by $71.62 trillion between 2022 and 2027 as it grows at a compound annual growth rate of 9.76%.

Some of the key drivers behind mutual funds’ market growth are increased market liquidity, increased share of financial savings, and rising awareness among investors. Consequently, most investors are increasingly turning to stock, bond, and money market funds in the race to gain exposure to the broader financial markets.

The growth of mutual funds in developing nations is another factor behind the 9.76% CAGR growth. Increased adoption of inflations indexed funds, and demand for market transparent should lead to significant demand in the market.

Our Methodology

Mutual funds have found their footing in 2023 amid a bounce back of the overall equity market and improved investor sentiments.

Funds with exposure to some of the biggest tech companies have posted impressive gains as their holdings benefit from the AI boom and improving market conditions. While compiling the list of the top-performing mutual funds, we focused on their returns over the past ten years while also analyzing their key holdings. In addition, we considered their ratings based on the MorningStar ranking that focuses on performance, risks, and costs compared to other funds.

10. Oberweis Micro Cap Fund (NASDAQ:OBMCX)

Ten-Year Gain: 16.13%

MorningStar Rating: 5 Star

Oberweis Micro Cap Fund (NASDAQ:OBMCX) is a fund that focuses on micro-cap growth companies. It mostly seeks capital appreciation through its investment strategy that focuses on companies with growth characteristics. It invests nearly 80% of its assets in companies with a market capitalization equal to or less than $600 million.

Consequently, Oberweis Micro Cap Fund focuses on companies within the Russell Micro-Cap Growth Index. Some of its biggest holdings include Axcelis Technologies, Inc. (NASDAQ:ACLS), Aehr Test Systems (NASDAQ:AEHR), Perion Network Ltd. (NASDAQ:PERI), and Lantheus Holdings, Inc. (NASDAQ:LNTH). The fund is up 21.65% year to date with ten-year gains of 16.13%. It boasts a solid five-star rating.

9. ProFunds NASDAQ-100 Fund (NASDAQ:OTPIX)

Ten-Year Gain: 16.28%

MorningStar Rating: 4 Star

ProFunds NASDAQ-100 Fund (NASDAQ:OTPIX) invests in the largest domestic and international non-financial companies that the fund managers believe will track the performance of the Nasdaq 100. It focuses on stocks from various industries, including computer hardware and software, telecommunication retail trade, and biotechnology.

Some of its biggest holdings include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), NVIDIA Corporation (NASDAQ:NVDA), and Meta Platforms, Inc. (NASDAQ:META). ProFunds NASDAQ-100 Fund boasts of a four-star rating on the MorningStar rating tool, having gained 40.95% year to date. It also boasts of a ten-year gain of 16.28%.

8. Baron Focused Growth Fund (NASDAQ:BFGFX)

Ten-Year Gain: 16.33%

MorningStar Rating: 5 Star

Baron Focused Growth Fund (NASDAQ:BFGFX) has made a name for itself as one of the best-performing mutual funds over the past ten years, going by its five-star rating on the MorningStar rating tool. The fund seeks capital appreciation by investing in US small and mid-sized growth companies that the advisers believe are undervalued relative to their long-term growth prospects.

A substantial percentage of Baron Focused Growth Fund’s assets are in its top ten holdings, which include Tesla, Inc. (NASDAQ:TSLA), Arch Capital Group Ltd. (NASDAQ:ACGL), Hyatt Hotels Corporation (NYSE:H), and CoStar Group, Inc. (NASDAQ:CSGP). Despite focusing on small-cap companies, the fund has gained 25.93% year to date and boasts of a ten-year return of 16.33%. It also boasts of a five-star rating on MorningStar Rating.

7. Fidelity OTC Pt (NASDAQ:FOCPX)

Ten-Year Gain: 16.58%

MorningStar Rating: 5 Star

Fidelity OTC Pt (NASDAQ:FOCPX) is a five-star mutual fund seeking capital appreciation by investing 80% of its assets in the Nasdaq 100 index stocks. It also invests in over-the-counter stocks with tremendous potential. It mostly focuses on companies with exposure to the technology sector, mostly focusing on growth and value stocks.

Apple Inc., Microsoft Corporation, Amazon.com, Inc., Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. are the fund’s biggest holdings accounting for 44% of its total weight. Given the stock’s impressive gains, explain why the fund is up 32.58% year to date. Additionally, the fund boasts of a 16.58% ten-year return.

6. Rydex NASDAQ-100 Fund (NASDAQ:RYOCX)

Ten-Year Gain: 17.35%

MorningStar Rating: 5 Star

Rydex NASDAQ-100 Fund (NASDAQ:RYOCX) is another mutual fund that has been delivering impressive gains owing to its focus on large-cap stocks. The fund strives to provide investment results and returns that align with the Nasdaq 100 index before fees and expenses. Therefore, it invests in companies whose performance will likely correspond with the Nasdaq 100.

Microsoft Corporation accounts for the biggest share of the fund’s holdings, followed by Apple and Amazon. The fund has also invested in NVIDIA Corporation and Meta Platforms, Inc.. Exposure to some of the biggest tech companies in the US explains why the fund is up 41.95% year to date. The five tech giants are up by double-digit percentage gains benefiting from the AI boom.

Additionally, Rydex NASDAQ-100 Fund boasts a 10-year return of 17.35% and commands a five-star rating on MorningStar ratings.

5. Fidelity Growth Company Fund (NASDAQ:FDGRX)

Ten-Year Gain: 17.60%
MorningStar Rating: 5 Star

Fidelity Growth Company Fund (NASDAQ:FDGRX)’s edge as one of the best-performing mutual funds stems from its investment strategy focusing on large-cap companies with tremendous growth potential. The investment strategy focuses on capital appreciation by investing in above-average growth potential stocks.

The hedge fund has benefited from its investments in NVIDIA Corporation, Apple Inc., Microsoft Corporation, and Amazon.com, Inc., which have been in fine form over the past year. Consequently, it has gained 38.12% year to date and averages about 17.60% gain over the past ten years. The stellar performance underscores why Fidelity Growth Company Fund is rated as a five-star mutual fund on MorningStar.

4. Shelton Capital Management Nasdaq-100 Index Fund (NASDAQ:NASDX)

Ten-Year Gain: 18.17%
MorningStar Rating: 5 Star

Shelton Capital Management Nasdaq-100 Index Fund (NASDAQ:NASDX) lives up to its status as a five-star mutual fund thanks to a strong investment culture. It mostly invests in stocks that have the potential to beat their respective category and allow it to track the performance of the Nasdaq 100 before fees and expenses.

Shelton Capital Management Nasdaq-100 Index Fund invests nearly 80% of its assets in stocks within the Nasdaq 100, therefore, offering exposure to some of the big tech companies in the US. Microsoft Corporation, Apple Inc., Amazon.com, Inc., NVIDIA Corporation, and Tesla, Inc. investments have allowed the fund to deliver solid returns over the years.

The fund has already gained 42.66% year to date and boasts an 18.17% average return over the past ten years.

3. VALIC Company I Nasdaq-100 Index Fund (NASDAQ:VCNIX)

Ten-Year Gain: 18.24%
MorningStar Rating: 5 Star

VALIC Company I Nasdaq-100 Index Fund (NASDAQ:VCNIX) is another five-star mutual fund, according to MorningStar ratings, that strives to generate long-term capital growth. It invests most of its holdings in large-cap companies focusing on those listed on the Nasdaq 100 index.

Given that it invests nearly 80% of its assets in stocks in the Nasdaq 100, its performance tends to align with that of the benchmark index. Microsoft Corporation stock remains its biggest holding in the index, followed by Apple Inc. and Amazon.com, Inc.. It also boasts of holdings in NVIDIA Corporation and Meta platforms. The five stocks account for 42% of the mutual fund portfolio.

With nearly half of its holding in some of the biggest tech companies explains, the fund’s strong performance depicted by 42.50% year-to-date gain. Additionally, the fund has an average 18.24% return over the past ten years.

2. Victory NASDAQ-100 Index (NASDAQ:USNQX)

Ten-Year Gain: 18.31%
MorningStar Rating: 5 Star

Victory NASDAQ-100 Index (NASDAQ:USNQX) is a five-star mutual fund that seeks to track and march before fees and expenses the performance of stocks in the Nasdaq 100 index. Consequently, it invests nearly 80% of its assets in stocks in the Nasdaq 100 to track its performance.

Microsoft Corporation accounts for the biggest weight of the fund’s weight at 12.73%, followed by Apple Inc. at 12.39% and NVIDIA Corporation at 6.84%. It also boasts significant stakes in Amazon.com, Inc. and Tesla.

The mutual fund has gained nearly 42% year to date and boasts a ten-year average return of 18.31%.

1. Baron Partners Fund (NASDAQ:BPTRX)

Ten-Year Gain: 20.69%
MorningStar Rating: 4 Star

Baron Partners Fund (NASDAQ:BPTRX) has been one of the best-performing mutual funds over the past decade, owing to its focus on large-cap stocks. While the fund seeks capital appreciation through its strategy, it invests mainly in large-cap companies with a sustainable competitive advantage and attractive valuation.

Tesla, Inc. remains the mutual funds biggest holding, accounting for about 46% of the portfolio weight, having gained more than 130% year to date. Its other big holdings include CoStar Group, Inc., up 16%, and Arch Capital Group Ltd., up 30% year to date.

Baron Partners Fund has gained nearly 46% year to date and averaged a 20% gain over the past ten years. It boasts of a four-star rating on Morningstar owing to its solid performance over the years and low risk and costs compared to other funds.

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily newsletter to get  the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out our articles on Nouriel Roubini on Bitcoin and Other Predictions and 10 Best Growth Mutual Funds and Their Latest Top Picks.

Suggested articles:

• 10 Best Growth Mutual Funds and Their Latest Top Picks
• 12 Best Low Volatility Stocks to Buy Now
• 11 Best Recession Dividend Stocks to Buy

This article is originally published at Insider Monkey.