In this article, we discuss top-performing mutual funds for 10 years. If you want to see more of top-performing mutual funds, check out 5 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.
Top-Performing Mutual Funds for 10 years
Source: pexels
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 (NASDAQ:OBMCX) 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 (NASDAQ:OTPIX) 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 (NASDAQ:BFGFX)'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. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META) 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 (NASDAQ:MSFT) accounts for the biggest share of the fund's holdings, followed by Apple and Amazon. The fund has also invested in NVIDIA Corporation (NASDAQ:NVDA) and Meta Platforms, Inc. (NASDAQ:META). 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 (NASDAQ:RYOCX) boasts a 10-year return of 17.35% and commands a five-star rating on MorningStar ratings.
