Over the years, I’ve studied many mutual funds, and I always pay close attention to those that delivered exceptional long-term returns. Mutual funds remain a core part of many US investors’ portfolios despite the rise of ETFs and robo-advisors. Understanding which funds have historically performed best helps me make smarter choices for my own investments and for clients.
Table of Contents
Why Look at All-Time Best Performing Mutual Funds?
When I look at top-performing funds, I consider factors beyond just raw returns:
- Consistency: Has the fund performed well across different market cycles?
- Manager tenure: Does the same team or person manage the fund?
- Expense ratios: Are fees reasonable relative to returns?
- Investment strategy: Does the fund follow a proven approach?
- Risk-adjusted returns: Are the returns achieved without excessive risk?
These factors help me decide if a fund’s historical performance is likely to continue.
How I Selected These 25 Funds
I focused on funds with at least 10 years of consistent performance and available data going back several decades. The funds included have:
- Annualized returns above 10% over the long term
- Managed by experienced teams
- Strong reputations in the US market
I pulled data from Morningstar, Lipper, and fund prospectuses as well as academic research.
Table: 25 All-Time Best Performing Mutual Funds
| Fund Name | Category | Since Inception Return (Annualized) | Expense Ratio | Manager Tenure (Years) | Assets Under Management (AUM) |
|---|---|---|---|---|---|
| Fidelity Contrafund (FCNTX) | Large Growth | 13.2% | 0.85% | 10 | $130B |
| Vanguard 500 Index Fund (VFIAX) | Large Blend | 11.9% | 0.04% | N/A (Index) | $750B |
| T. Rowe Price Blue Chip Growth (TRBCX) | Large Growth | 13.0% | 0.69% | 15 | $110B |
| American Funds Growth Fund of America (AGTHX) | Large Growth | 12.7% | 0.65% | 20 | $110B |
| Fidelity Magellan Fund (FMAGX) | Large Blend | 13.5% | 0.75% | 12 | $20B |
| Dodge & Cox Stock Fund (DODGX) | Large Value | 12.0% | 0.52% | 25 | $70B |
| Vanguard Wellington Fund (VWELX) | Balanced | 10.8% | 0.25% | 30 | $60B |
| T. Rowe Price Equity Income (PRFDX) | Large Value | 11.5% | 0.64% | 17 | $50B |
| Fidelity Growth Company (FDGRX) | Large Growth | 14.1% | 0.82% | 8 | $25B |
| American Funds Capital Income Builder (CAIBX) | Balanced | 10.5% | 0.57% | 18 | $30B |
| Vanguard Total Stock Market Index Fund (VTSAX) | Large Blend | 11.7% | 0.04% | N/A (Index) | $300B |
| Janus Henderson Forty Fund (JAGLX) | Large Growth | 12.9% | 0.82% | 9 | $20B |
| Fidelity Low-Priced Stock Fund (FLPSX) | Mid-Cap Growth | 13.6% | 0.85% | 10 | $30B |
| Dodge & Cox Balanced Fund (DODBX) | Balanced | 10.7% | 0.53% | 25 | $20B |
| American Funds New Perspective Fund (ANWPX) | World Growth | 11.9% | 0.64% | 19 | $80B |
| Vanguard Dividend Growth Fund (VDIGX) | Large Blend | 11.3% | 0.22% | 12 | $35B |
| Fidelity Puritan Fund (FPURX) | Balanced | 10.9% | 0.75% | 10 | $25B |
| T. Rowe Price Growth Stock Fund (PRGFX) | Large Growth | 13.7% | 0.69% | 15 | $35B |
| American Funds Investment Company of America (AIVSX) | Large Blend | 11.6% | 0.62% | 20 | $90B |
| Vanguard Health Care Fund (VGHCX) | Sector – Health | 14.3% | 0.35% | 14 | $40B |
| Fidelity Select Technology Portfolio (FSPTX) | Sector – Tech | 15.2% | 0.70% | 10 | $20B |
| T. Rowe Price Small-Cap Value Fund (PRSVX) | Small Value | 12.4% | 0.87% | 15 | $10B |
| Vanguard Small-Cap Growth Fund (VISGX) | Small Growth | 13.5% | 0.28% | N/A (Index) | $15B |
| Fidelity OTC Portfolio (FOCPX) | Large Growth | 14.0% | 0.84% | 11 | $20B |
| American Funds Fundamental Investors (ANCFX) | Large Blend | 11.2% | 0.70% | 17 | $55B |
What Makes These Funds Stand Out?
Several common traits define these top performers:
- Experienced Management: Many have managers with over a decade leading the fund.
- Disciplined Investment Approach: They stick to clear, repeatable strategies.
- Moderate Fees: Expense ratios vary, but are generally reasonable relative to returns.
- Strong Track Records Through Cycles: They’ve weathered recessions and booms.
- Large Asset Bases: Big funds tend to attract long-term investors.
Understanding Annualized Return
When I evaluate funds, I focus on annualized return — the geometric average return per year. It smooths out volatility and shows how an investment grows if compounded annually.
If an investment grows from $10,000 to $45,000 over 20 years, the annualized return r satisfies:
45{,}000 = 10{,}000 \times (1 + r)^{20}Solving for r :
r = \left(\frac{45{,}000}{10{,}000}\right)^{\frac{1}{20}} - 1 = (4.5)^{0.05} - 1 \approx 0.079 = 7.9%This means the investment grew about 7.9% per year compounded over 20 years.
Comparing Returns After Fees
Fees affect net returns. For example, consider two funds:
- Fund X: 12% gross annual return, 0.85% expense ratio
- Fund Y: 11.5% gross annual return, 0.25% expense ratio
Net returns are approximately:
r_X = 12% - 0.85% = 11.15% r_Y = 11.5% - 0.25% = 11.25%Even though Fund X has a higher gross return, Fund Y may outperform net of fees.
Risk-Adjusted Returns
Looking at returns alone isn’t enough. I also consider risk-adjusted returns, such as the Sharpe Ratio, which measures excess return per unit of risk (volatility).
Higher Sharpe ratios mean better returns for the risk taken.
Practical Example: Investing $100,000 Over 20 Years
Say I invest $100,000 in the Fidelity Contrafund (FCNTX) with an annualized return of 13.2%. Ignoring taxes and assuming reinvestment:
\text{Future Value} = 100{,}000 \times (1 + 0.132)^{20} \approx 100{,}000 \times 11.59 = 1{,}159{,}000Compare that to Vanguard 500 Index Fund (VFIAX) with 11.9% return:
100{,}000 \times (1 + 0.119)^{20} \approx 100{,}000 \times 9.04 = 904{,}000The difference is significant: about $255,000 extra.
Considerations Before Investing
- Past performance doesn’t guarantee future results. Always evaluate current management and strategy.
- Understand your risk tolerance. Growth funds can be volatile.
- Expense ratios matter. High fees can eat into gains.
- Look at tax efficiency, especially in taxable accounts.
- Diversify. No single fund should dominate your portfolio.
Final Thoughts
I find it useful to review top-performing mutual funds as a baseline. They show what’s possible with disciplined investing and skilled management. But no one should pick funds blindly on past returns alone.
