What are the best-performing large cap mutual funds? There’s two unique funds which have a proven track record of excellent returns.
First, the Fidelity Contrafund is legendary. For 20 years, manager William Danoff has consistently beaten the market. (And note that the Contrafund is a “single-manager” fund – that Danoff himself is overseeing the make-up of the portfolio.) The fund started out with just $300 million in assets, but under Danoff’s tenure it’s increased to more than 200 times its original size, to a whopping $78 billion in assets. This makes it one of the five largest mutual funds in the United States, according to MarketWatch – and his performance eventually made Danoff a finalist for a prestigious lifetime achievement award from the magazine Investment News.
They noted that in 2007, when the Standard and Poors Index had a small 5.5% return, Danoff’s Contrafund pulled in a staggering 19.8%. And that’s even more impressive when you consider the billions of dollars which Danoff has to place as new investment money keeps pouring in to the fund. Yet Danoff “has managed to be successful when the fund was small and then when it was really large…” a Morningstar analyst told the magazine. “He has a unique ability to analyze companies and understand companies in a way that other managers cannot.” And with his reputation always on the line, Danoff has assembled a massive research staff to try to seek out the best new investment opportunities.
But the Contrafund has an equally large competitor: the Investment Company of America. It’s also been around since the early 90s, and with nearly $80 billion in assets, it’s one of the five largest mutual funds in America (according to Marketwatch). In fact, the American Funds family has grabbed four of the top five slots. For the last 10 years, the Investment Company of America has outperformed the Standard and Poors index by an average of 3.11% each year, according to the Morningstar investment site, adding that the fund “has the ability to weather tough times.”
There’s always a risk in investing in any mutual fund solely based on the returns it’s already achieved. (Nearly every fund prospectus includes the warning that “Past performance does not guarantee future results.”) But there’s some comfort in knowing that you’re investing in one of the largest funds, and from one of the largest fund companies. They’ve spent decades establishing their reputation, so they’ll do everything they can to keep earning the same high returns!