Top Mutual Funds That Outperformed the S&P 500 Consistently

The S&P 500 has long served as a benchmark for U.S. equity performance, providing an average annual return of about 10%. However, consistently beating this index remains a difficult task.

In 2024, only about 10.5% of actively managed large-cap funds managed to surpass the S&P 500's 24% return.

Despite these odds, several mutual funds have demonstrated remarkable performance, consistently outpacing the S&P 500 over various time frames.

Top 10 Mutual Funds That Outperformed the S&P 500

1. Baron Partners Fund (BPTRX)

• 5-Year Annualised Return: Approximately 20%

• Expense Ratio: 1.55%

• Minimum Investment: $2,000

Managed by renowned investor Ron Baron, the Baron Partners Fund has achieved an impressive 1,843% return since 2003, significantly outperforming the S&P 500's 536% gain over the same period. The fund's success is attributed to its long-term investment strategy, focusing on companies with substantial growth potential. 

Notably, the fund holds a significant position in Tesla, comprising 35% of its portfolio, reflecting Baron's bullish outlook on the company's future.

2. T. Rowe Price Science & Technology Fund (PRSCX)

• 2024 Return: 40.3%

• Expense Ratio: 0.76%

• Minimum Investment: $2,500

The T. Rowe Price Science & Technology Fund significantly outperformed the S&P 500 in 2024, delivering a 40.3% return compared to the index's 23%. Manager Anthony Wang attributes this success to strategic investments in AI infrastructure and technology giants like Meta, Alphabet, Microsoft, Apple, and Nvidia.

The fund's focus on earnings growth, valuation, and quality has positioned it as a top performer in the tech sector.

3. Permanent Portfolio Aggressive Growth Portfolio

• 2024 Return: 28%

• 10-Year Annualised Return: 13.28%

• Expense Ratio: 0.89%

• Minimum Investment: $1,000

Managed by Michael Cuggino, the Permanent Portfolio Aggressive Growth Portfolio has demonstrated consistent outperformance, with a 28% return in 2024 and a 10-year annualised return of 13.28%, surpassing the S&P 500's 13.1% over the same period.

The fund's diversified approach, with significant exposure to the tech sector and selective investments across various industries, has contributed to its robust performance.

4. Alger Focus Equity Fund (ALGRX)

• 2024 Return: 51.8%

• Expense Ratio: 1.28%

• Minimum Investment: $1,000

The Alger Focus Equity Fund achieved a remarkable 51.8% return in 2024, doubling the S&P 500's performance. The fund's strategy centres on investing in high-conviction, growth-oriented companies, particularly in technology. 

Its concentrated portfolio approach has enabled it to capitalise on significant growth opportunities.

5. Fidelity Growth Company Fund (FDGRX)

• 5-Year Annualised Return: Approximately 18%

• Expense Ratio: 0.79%

• Minimum Investment: $2,500

The Fidelity Growth Company Fund focuses on companies with above-average growth potential. Its diversified portfolio spans various sectors, including technology, healthcare, and consumer discretionary.

The fund's disciplined investment process and experienced management team have contributed to its consistent outperformance over the years.

6. AMG Yacktman Focused Fund (YAFFX)

• 2024 Return: ~29%

• 5-Year Annualised Return: ~15.6%

• Expense Ratio: 0.99%

• Minimum Investment: $2,500

The AMG Yacktman Focused Fund follows a value-based investing strategy, emphasising high-quality companies trading below intrinsic value. 

The fund's manager, Stephen Yacktman, has a strong track record of navigating volatility through defensive positioning and concentrated bets on undervalued blue-chip stocks.

7. JP Morgan Large Cap Growth Fund (OLGAX)

• 2024 Return: 37.2%

• 3-Year Annualised Return: 21.3%

• Expense Ratio: 0.79%

• Minimum Investment: $1,000

This fund invests in mega-cap technology and healthcare companies with durable growth and solid cash flows. The fund has historically benefitted from massive positions in companies like Nvidia, Microsoft, and Eli Lilly, which have driven performance during tech and AI booms.

8. PRIMECAP Odyssey Growth Fund (POGRX)

• 2024 Return: 33.8%

• 10-Year Annualised Return: 14.8%

• Expense Ratio: 0.65%

• Minimum Investment: $2,000

Known for its patience and deep research, PRIMECAP has consistently invested early in innovative sectors like biotech, aerospace, and tech. The fund's long holding periods allow it to benefit from compound growth.

9. Morgan Stanley Insight Fund (CINSX)

• 2024 Return: 42.5%

• 5-Year Annualised Return: 19.2%

• Expense Ratio: 0.71%

• Minimum Investment: $1,000

This fund gained major traction by positioning early in the AI, cloud computing, and SaaS sectors. It focuses on small- to mid-cap innovative growth companies, making it a high-octane complement to traditional large-cap funds.

10. T. Rowe Price Blue Chip Growth Fund (TRBCX)

• 2024 Return: 31.5%

• 10-Year Annualised Return: 15.2%

• Expense Ratio: 0.69%

• Minimum Investment: $2,500

This fund targets established sector leaders with strong brand equity and scalable business models. Holdings in Microsoft, Apple, and UnitedHealth Group have consistently pushed this fund to outperform the S&P 500.

Key Factors Behind Consistent Outperformance

• Long-Term Investment Horizon: Funds like Baron Partners emphasise holding investments for extended periods, allowing them to ride out market volatility and capitalise on long-term growth trends.

• Focused Investment Strategies: Top-performing funds often concentrate on high-conviction ideas, enabling them to benefit significantly from successful investments.

• Sector Expertise: Funds with specialised knowledge in sectors like technology have been able to identify and invest in high-growth companies ahead of the broader market.

• Experienced Management: Seasoned fund managers bring valuable insights and disciplined approaches to portfolio construction and risk management.

• Adaptability: Successful funds remain agile, adjusting their strategies in response to evolving market conditions and emerging opportunities.

Conclusion

In conclusion, while index funds like the S&P 500 offer simplicity and steady returns, actively managed mutual funds can provide meaningful outperformance for those willing to assume a bit more risk and conduct due diligence. 

These 10 funds have earned their place on the leaderboard by sticking to proven investment strategies, focusing on long-term fundamentals, and adapting to evolving market conditions.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.