2025 Mutual Fund Guide: A Look at Top Performers

The S&P 500 index reached record highs 57 times in 2024, delivering a 25% return and marking its best two-year stretch in 25 years. This impressive performance was fueled by three short-term interest rate cuts, and further boosted by the election results, which raised investor expectations of tax cuts, deregulation, and government spending. However, while U.S. stocks had a great year, foreign stocks experienced a late-summer slump, and emerging markets saw mixed results.

This guide provides a look at the top-performing stock mutual funds in 11 categories, utilizing data from Morningstar. The funds included have a minimum investment requirement of $10,000 or less, excluding those only available to institutional investors or select advisory clients. It's important to remember that these lists are for informational purposes only and not investment recommendations.

Key Highlights from the Guide

• Large-Company Stock:

  • Growth stocks led the pack, with Fred Alger Management funds dominating the one-year winners list.
  • Alger Focus Equity A led the one-year returns with 51.7%.
  • Baron Partners Retail stood out for its 5-year and 10-year performance.
  • Fidelity Blue Chip Growth was noted for its consistent performance.

• Small-Company Stock:

  • Kinetics Small Cap Opportunities No Load topped the winners list across all four time periods.
  • Hennessy Cornerstone funds had a strong showing, with a focus on industrials.
  • Oberweis funds are noted for capitalizing on market inefficiencies.

• Midsize-Company Stock:

  • Kinetics Paradigm and Kinetics Market Opportunities appeared on the top-10 lists across all four periods.

• Texas Pacific Land was a significant holding for many of the top-performing midsize company stock funds.

• T. Rowe Price Mid-Cap Value has performed well since mid 2022.

• Foreign Large-Company Stock:

  • Pimco StocksPLUS International (USD-Hedged) uses derivatives to track the dollar-hedged MSCI EAFE index, enhancing returns with an actively managed bond portfolio.

• Marsico International Opportunities benefited from a 40% stake in U.S. stocks.

• Hybrid Funds:

• Kinetics Global No Load had very strong performance in all time periods, despite not being a typical hybrid fund. It was categorized as a global small- and midsize-company stock fund for years before being reclassified in 2022. This fund also holds a significant cash position.

• Fidelity Freedom Index 2065 and Putnam Retirement Advantage 2065, target-date funds, stood out.

• Disciplined Growth Investors also made the lists in the three, five, and ten year tables.

• Global Stock:

  • Morgan Stanley Inst Global Insgt A was the top performer for the one-year returns.
  • Fidelity Worldwide and Marsico Global performed well due to their high exposure to U.S. stocks.
  • Third Avenue Value focuses on small- to midsize-company foreign stocks.

• Foreign Small- and Midsize-Company Stock:

  • Brandes International Small Cap Equity appeared on the winners list for all four time periods, but had inconsistent year to year performance.
  • Brown Capital Management International Small Company was also a top performer.
  • Fidelity International Small Cap and Oakmark International Small Cap also stood out.

• Regional and Single-Country:

  • India funds dominated, outperforming other regions.
    • Wasatch Emerging India was a notable performer.
  • Hennessy Japan funds saw success, especially over the 1 year and 10 year time periods.
  • Matthews Asia Innovators tapped into fast-growing sectors in Asia outside of Japan.

• Diversified Emerging-Markets Stock:

• While the MSCI Emerging Markets index gained 7.5% overall, China's performance of 19% buoyed the overall performance as other large players such as Brazil and South Korea saw big losses.

• Artisan Developing World and Matthews EM Sm Coms Inv were among the top funds.

• Pzena Emerging Markets Value was noted for focusing on deeply discounted shares.

• Alternative Funds:

  • Bitcoin funds topped the one-year winners after the price of the digital currency increased dramatically.

• Otter Creek Long/Short Opportunity buys stocks they believe are undervalued and sells short stocks that are overvalued.

• Sector Funds:

  • Technology and energy funds led the sector returns.
  • Fidelity Select Semiconductor and Fidelity Select Technology were among the best tech performers.
  • Kinetics Spin-Off and Corporate Restructuring was a top performer in the energy sector.

 

Important Considerations for Investors:

• Past performance is not indicative of future results.
• Many funds charge up-front sales fees, but shares can often be purchased without these fees at major online brokers.
• Some funds are only available directly from the fund company.
• Morningstar classifications for some funds may seem unusual.
• Expense ratios vary between funds and should be considered.

This guide provides a comprehensive overview of the top-performing mutual funds in various categories for 2024, offering a starting point for investors to conduct their own research.