Do any mutual funds outperform the S&P 500?
Any stock fund manager can top the benchmark S&P 500 in any given year. But the best funds have a proven investment strategy and performance record. These are the funds that consistently post benchmark-beating returns over periods ranging from a year to a decade.
Fund | 2023 performance (%) | 5yr performance (%) |
---|---|---|
MS INVF US Insight | 52.26 | 34.65 |
Sands Capital US Select Growth Fund | 51.3 | 76.97 |
Natixis Loomis Sayles US Growth Equity | 49.56 | 111.67 |
T. Rowe Price US Blue Chip Equity | 49.54 | 81.57 |
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.
In the trailing five-, 10-, 15-, and 20-year periods, the Vanguard Growth ETF (VUG 0.98%) has outperformed the S&P 500. That is a remarkable track record.
It found that over the course of one year, 51.08% of actively-managed mutual funds underperformed the S&P 500, and 48.92% of actively-managed funds outperformed the S&P 500.
(NASDAQ:DXCM) and Medpace Holdings, Inc. (NASDAQ:MEDP) are the only two healthcare sector companies that have made it onto our list of 13 stocks that outperform the S&P 500 every year for the last 5 years. The shares of DexCom, Inc.
Rowe Price U.S. Equity Research fund (ticker: PRCOX) is in this exclusive club, having bestedâalong with a team of about 30 research analystsâthe 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.
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. I personally spread mine in 25% of those four.
Ticker | Name | 5-year return (%) |
---|---|---|
STSEX | BlackRock Exchange BlackRock | 16.27% |
USBOX | Pear Tree Quality Ordinary | 16.13% |
FGLGX | Fidelity Series Large Cap Stock | 16.08% |
PRCOX | T. Rowe Price U.S. Equity Research | 16% |
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%. |
Why you shouldn't just invest in the S&P 500?
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. But that's not necessarily a bad thing.
âIn my view, for most people, the best thing to do is own the S&P 500 index fund,â Buffett said at Berkshire's 2020 annual meeting. Buffett's thinking here is straightforward. Most non-professional investors (and even many professional stock-pickers) have very little chance of outperforming the market.
The S&P 500 weighting system gives a small number of companies major influence, which could have an undue negative effect on the index if one or a few of them run into trouble. The index does not expose investors to small or emerging companies with the potential for market-beating growth.
Actively managed mutual funds may have higher expense ratios, leading to a potential performance lag against the market. Conversely, the risk of underperforming the market benchmark is prevalent in index funds, particularly when active management outperforms the market index.
Although it is very difficult, the market can be beaten. Every year, some managers boast better numbers than the market indices. A small fraction even manages to do so over a longer period. Over the horizon of the last 20 years, less than 10% of U.S. actively managed funds have beaten the market.
And over a full 20-year period ending last December, fewer than 10 percent of active U.S. stock funds managed to beat their benchmarks.
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500, then you would be sitting on a cool $1.2 million today.
Key Points. Less than 10% of active large-cap fund managers have outperformed the S&P 500 over the last 15 years. The biggest drag on investment returns is unavoidable, but you can minimize it if you're smart. Here's what to look for when choosing a simple investment that can beat the Wall Street pros.
Think About This: $10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years â an average return of 6.07% per year.
What is the 10 year return on the S&P 500?
Basic Info. S&P 500 10 Year Return is at 180.6%, compared to 174.1% last month and 161.9% last year. This is higher than the long term average of 114.4%.
The historical average yearly return of the S&P 500 is 12.68% over the last 10 years, as of the end of February 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.56%.
Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.
Rank | Symbol | Fund Name |
---|---|---|
1 | VSMPX | Vanguard Total Stock Market Index Fund;Institutional Plus |
2 | FXAIX | Fidelity 500 Index Fund |
3 | VFIAX | Vanguard 500 Index Fund;Admiral |
4 | VTSAX | Vanguard Total Stock Market Index Fund;Admiral |
And to go one step further, we recommend dividing your mutual fund investments equally between four types of funds: growth and income, growth, aggressive growth, and international.
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