No fund investor wants to own a one-year wonder. They want a best-performing mutual fund that's built to last — one that posts consistent market-beating returns. That's why owning mutual funds run by the best stock pickers is a road map to building wealth.
In honor of IBD's 10th year publishing its list of the best-performing mutual funds across both bull markets and stock market corrections, we interviewed top fund managers who beat their benchmark in the past 10 years to find out what makes their funds consistent moneymakers.
Managers of the most successful funds — from a concentrated portfolio of innovative large-cap companies to a fund with 100 highly diverse stocks — focus on stock selection, as well as risk management to adjust market exposure.
A Decade Of The Best Mutual Funds
Investor's Business Daily's Best Mutual Funds 2025 Awards winners have 10-year performance records and have topped their respective market benchmarks in the past one-, three-, five- and 10-year periods ended Dec. 31.
If you're looking for a fund with a history of beating the market, IBD's 2025 list of the best performing mutual funds is a good place to find winners.
In this year's Best Mutual Funds list, 946 funds (up from 615 last year) made the cut out of 3,795 funds. U.S. taxable bond funds had the most winners (588 funds), thanks to Federal Reserve interest rate cuts that slashed its short-term borrowing rate by a full percentage point.
Only 62 of 1,289 U.S. diversified stock funds beat the S&P 500's 25% total return and made our list. Growth funds led the way with 52 award winners. Ten blend funds made the list.
For the second straight year, no value funds qualified. On a market-cap basis, 59 large-cap stock funds made our list of best-performing mutual funds. But only two midcap funds and a single small-cap fund did.
Fidelity Investments dominated IBD's 2025 list of the best-performing mutual funds with 15 award-winning funds in the U.S. diversified equity funds category alone. Fidelity funds won a total of 78 awards across nine categories this year.
Best-Performing Mutual Funds Profit from Tech Giants
U.S. stock funds struggled due to narrow market leadership. The Magnificent Seven megacaps — Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla — accounted for half (53.1%) of the S&P 500's total return, S&P Dow Jones Indexes says.
That made it tough for funds that invest in value stocks and small caps to top the S&P 500, the benchmark IBD uses for its best U.S. funds list. Only 14 sector funds won awards, and most were technology funds.
International stock funds fared better, with 158 of 644 international funds, or 25%, making it to the winner's circle. International stock funds are benchmarked against the MSCI EAFE NR USD index.
| Fund Category | # Beating benchmark all four periods | Funds 10 years old | Winners % of universe |
|---|---|---|---|
| U.S. diversified stock funds | 62 | 1289 | 5% |
| Growth funds* | 52 | 443 | 12% |
| Blend funds* | 10 | 436 | 2% |
| Value funds* | 0 | 410 | 0% |
| Large-cap funds* | 59 | 680 | 9% |
| Midcap funds* | 2 | 248 | 1% |
| Small-cap funds* | 1 | 361 | 0% |
| Sector funds | 14 | 281 | 5% |
| International stock funds | 158 | 644 | 25% |
| U.S. taxable bond funds | 588 | 828 | 71% |
| Muni funds | 55 | 443 | 12% |
| International bond funds | 62 | 91 | 68% |
| Index funds | 7 | 219 | 3% |
| Total funds (excluding subcategories) | 946 | 3,795 | 25% |
*Subcategory of U.S. diversified stock funds
Our list of Best Mutual Funds is a valuable research tool if you're looking to build or upgrade a portfolio. It highlights top funds in 13 investment categories.
We spoke with top fund managers that made this year's list to learn their keys to success.
See Our Full Special Report On The Best Mutual Funds
How A Top U.S. Diversified Fund Profits From A Concentrated Portfolio
Tom Marsico, manager of Marsico Focus (MFOCX), only invests in his best ideas. Using a concentrated portfolio strategy, Marsico Focus posted a 10-year annualized return of 15.25%.
Marsico runs a high-conviction portfolio, owning 20 to 35 stocks. He focuses on innovative large-cap companies with long-term growth potential that are industry leaders and profit from investment themes with long runways.
"A concentrated portfolio focuses the attention on stock selection," said Marsico.
Marsico invests in companies in sectors of the economy growing the fastest. Impenetrable and dominant market share is a must-have. The fund favors companies with a high degree of recurring revenues with the ability to grow earnings at a faster pace than competitors due to innovative product developments. Identifying companies that create and profit from new industries and markets is key. Fund holdings include social media and AI play Meta Platforms, streaming service Netflix and AI-chip maker Nvidia.
"You want to invest in growth areas of the market," said Marsico.
Analyze A Company's Potential
Not selling winners is another key to producing strong returns, says Marsico. It's tough when a stock's valuation gets stretched. But before you sell and pay capital gains, use unbiased stock analysis to assess the company's potential to grow into the multiple.
"If you believe it's going to be a much larger company in the next three, five, 10 years, you don't want to sell it," said Marsico.
Big-box retailer Costco Wholesale, a current holding, is a prime example. "It trades at a very high multiple," said Marsico. "But it's a predictable, phenomenal company. They execute flawlessly. So, we'll hold on."
When it comes to high conviction, Marsico likes GE Aerospace, and power play GE Vernova, a spinoff focusing on sustainable electric power.
Marsico recalls GE when it was a struggling conglomerate, but knew its jet-engine business was its "crown jewel." The aerospace industry sells to two major aircraft makers and has only a handful of competitors. GE's bottom line also benefits from servicing the engines and selling parts, Marsico says.
Marsico likes big themes, such as younger generations who favor experiences. He built a new position in TKO Group Holdings, which owns World Wrestling Entertainment and is the parent of Ultimate Fighting Championship. Marsico sees upside in the global opportunity WWE and UFC offer, the buzz the events generate, and the likelihood that TV renewal rates will be higher than current rates.
Read About How To Spot Stock Market Tops
Best-Performing Mutual Funds: Top Growth Fund Wins With Style Diversity
Daniel Mahr, manager of Federated Hermes MDT Large Cap Growth (QILGX), isn't wedded to just one type of growth stock.
The fund's strong performance is all about diversification. But not just the number of stocks (Mahr's fund holds roughly 100 names). It's about diversifying the types of growth stocks the fund owns.
If you only invest in the fastest growing companies, or stocks that offer growth at a reasonable price, or names that trade at valuation discount, performance can suffer if any specific style underperforms.
"You want to have a portfolio that has a robust outcome no matter what group of stocks are in or out of favor," said Mahr. "The key is not having too much exposure to any one name, sector, or type of stock."
The fund has posted an annualized return of 16.13% the past 10 years.
Risk management is also critical. Since big-cap indexes are dominated by companies with huge weightings, Mahr doesn't take the risk of majorly overweighting or underweighting any one name. The downside of being wrong is too great, says Mahr.
As a result, Mahr's top-10 holdings are concentrated. They account for roughly half of fund assets, including large positions in the Magnificent Seven stocks, as well as chipmaker Qualcomm, Costco, and networking equipment provider Arista Networks.
Mahr is overweight Qualcomm, which he considers a value play. "They trade at 13 times next year's earnings and we find that valuation to be very compelling in a large-cap growth space selling around 30 times," said Mahr.
Avoiding Mistakes With A Systematic Quantitative Approach
Another secret to the fund's success is not letting subjective or emotional influences get in the way of stock selection or taking advantage of market inefficiencies. That's why Mahr employs a systematic quantitative approach. "It helps us avoid a lot of the common mistakes investors make," said Mahr.
"Having the ability to see through the short-term volatility and hang on for the momentum over the longer run with some of these exceptional growers is a bit of an investing superpower."
Many investors miss out on opportunities when quality stocks are selling at distressed prices. Mahr started buying Spotify Technology, the digital music service, in late 2022 and early 2023 when it was down 70% to 80%. Sentiment just got too negative. So he pounced.
"There was nothing wrong with the business," said Mahr. "They were continuing to grow and take market share. Fast-forward to today; they have recouped their entire drawdown."
Best-Performing Mutual Funds: Top Global Stock Fund Scours the Globe
David Eiswert, manager of T. Rowe Price Global Stock (PRGSX), runs a high-conviction portfolio. Global investing is about "opportunity and choice." The goal? Find companies with improving business fundamentals and accelerating returns on capital over the next 12 to 24 months.
Change is good, he says. "The key to being a good growth investor is having the ability to look into the future and dream about the possibilities," said Eiswert.
This top global fund is a go-anywhere type portfolio. "(It's a) multicap, multi-sector, multi-region portfolio — any market cap, any sector, any country," Eiswert said.
T. Rowe Price Global Growth, which has generated annual returns of 13.15% over the past 10 years, evaluates stocks through an "improving return on capital lens." The fund owns traditional secular growers as well as out-of-favor cyclicals, defensive growth, and idiosyncratic ideas that other investors might not define as growth.
Eiswert is bullish on Japanese game developer Nintendo. "We believe the market is underestimating both the future earnings acceleration from the upcoming console cycle (upgrade to Switch 2 later this year), and the possible margin improvement from digitization," said Eiswert.
He also likes U.K.-based consumer staples giant Unilever. Unilever, whose brand assets include Dove, Hellman's, and Ben & Jerry's, has meaningful exposure to demographically growing emerging markets, Eiswert says.
"Historically, the company has offered a solid defensive profile, which can be advantageous in an uncertain economic environment," said Eiswert.
How a Top Aggressive Growth Fund Posts Market-Beating Gains
Michael Cuggino, manager of Permanent Portfolio Aggressive Growth Portfolio (PAGRX), runs a fully invested portfolio. He zeros in on stocks with the potential to post better profits and higher price appreciation than the overall market. It's an all-cap fund, allowing Cuggino to buy large-, mid- and small-cap names. He looks for stocks selling at good valuations that have large addressable markets.
Once Cuggino buys a stock, he hangs on for the long haul. "We grow with the business," Cuggino said. "We look for large macro, multiyear stories."
The fund has returned 13.28% per annum in the past 10 years.
"Staying fully invested avoids the risk of being wrong with market timing," said Cuggino.
The ability to invest in any size stock expands the fund's opportunity set beyond what's in a single index.
The fund's top 15 holdings aren't all tech. The fund owns Nvidia. But it also holds mining company Freeport-McMoRan, home product retailer Williams-Sonoma, and defense contractor Lockheed Martin.
The fund has a tax-efficient streak, too. Cuggino often lets the winner ride to avoid tax drag. "We're looking at the after-tax impact of our trades," said Cuggino.
How a Top Sector Fund Wins With Tech Stocks
Investing in a sector with the best growth prospects is a good way to top the S&P 500. Case in point: Putnam Global Technology Fund (PGTYX), which has posted annualized returns of 20.44% over the past 10 years.
"Tech companies are the primary drivers of growth and productivity in the global economy," said comanager Andrew O'Brien. "Tech is a self-selecting hunting ground … with the best tailwinds."
O'Brien buys fast-growing stocks that will keep growing. "We try to identify companies that have the longest duration growth with the most attractive economics," said O'Brien.
The fund puts more money in investors' pockets by avoiding laggards, too. O'Brien favors tech names that benefit from secular themes like AI, autonomous driving, and the online subscription economy. The team analyzes an array of key performance indicators that offer insight into which companies have improving numbers that will fare far better than Wall Street expects.
He loves companies that generate fresh revenue streams by building off their existing business. Take Microsoft. Its customer base was built off its Office software, but it now earns massive revenue from many of the same clients buying its cloud-based Azure services. "That gives them a huge competitive advantage," said O'Brien.
Having the ability to invest in the best tech firms outside the U.S. is another performance booster. That global reach unearthed SEA, which operates Southeast Asia's largest e-commerce company. "They're at this great inflection point for profitability," said O'Brien.
