Skip to headerSkip to main contentSkip to footer
Get our Free E-newslettersGet our Free E-newsletters
Kiplinger logoLink to homepage
Get our Free E-newslettersGet our Free E-newsletters
Subscribe to Kiplinger
Subscribe to Kiplinger
Save up to 76%
Subscribe
Subscribe to Kiplinger
  • Store
  • Home
  • Investing
  • Retirement
  • Taxes
  • Personal Finance
  • Your Business
  • Wealth Creation
  • More
    • Podcasts
    • Economic Outlooks
    • Tools
  • My Kiplinger
    • Kiplinger's Personal Finance Magazine
    • The Kiplinger Letter
    • The Kiplinger Tax Letter
    • Kiplinger's Investing for Income
    • Kiplinger's Retirement Report
    • Store
    • Manage My E-Newsletters
    • My Subscriptions
  • Home
  • investing
  • mutual funds
mutual funds

3 Actively Managed Funds That Beat the S&P 500

It’s no secret that index funds rule.

by: Nellie S. Huang
July 6, 2017

It’s no secret that index funds rule. In the 15-year period that ended in December 2016, 92% of actively managed large-company stock funds lagged Standard & Poor’s 500-stock index. But do any funds beat the index? As a matter of fact, some do.

To find large-company stock funds that have done the best job of beating the S&P 500, we picked apart the returns of some winning funds, analyzing calendar-year returns, annualized returns over the past one-, five- and 10-year periods and rolling 12-month returns over the past 10 years, which track successive 12-month periods starting anew each month.

We concede, these funds lagged the S&P 500 during some stretches over the past decade. But our favorites outpace the index on a one-year, three-year, five-year and 10-year annualized return basis. And perhaps more important, they were the most consistent, too, outperforming the benchmark in more than 70% of the rolling-return periods we scrutinized.

Data is as of July 3, 2017. Click on symbol links in each slide for current share prices and more.

1 of 3

Fidelity Blue Chip Growth

  • Symbol: FBGRX
  • One-year return: 26.9% (vs. 17.9% for S&P 500)
  • Three-year return: 10.5% (vs. 9.2%)
  • Five-year return: 16.6% (vs. 14.5%)
  • 10-year return: 9.9% (vs. 7.1%)
  • Expense ratio: 0.82%

Blue Chip Growth manager Sonu Kalra can’t take credit for the fund’s entire 10-year record, but he comes close enough. He took over Blue Chip Growth in July 2009.

Kalra must invest most of Blue Chip’s assets in companies that are members of the S&P 500 or the Dow Jones industrial average, or firms that have a market value of at least $1 billion if they are not in either of those indexes. On top of that is a growth requirement: Kalra seeks firms with expected long-term earnings growth of at least 10% a year.

Before taking over at Blue Chip Growth, Kalra ran the tech-heavy Fidelity OTC Portfolio (FOCPX)—more on that fund later—and before that, Fidelity Select Computers. So, it’s no surprise that tech stocks make up 40% of the fund’s holdings, which is more than the 32% weighting of information technology stocks in the S&P 500 (it’s also heftier than the 29% weighting in the average large-company growth fund). Apple (AAPL), Alphabet (GOOGL) and Amazon.com (AMZN) are among the fund’s biggest holdings.

Since Kalra took over the fund, his annualized return of 17.6% beats the S&P 500 by an average of 2.6 percentage points per year.

2 of 3

Fidelity OTC Portfolio

  • Symbol: FOCPX
  • One-year return: 34.4% (vs. 17.9% for S&P 500)
  • Three-year return: 14.5% (vs. 9.2%)
  • Five-year return: 19.8% (vs. 14.5%)
  • 10-year return: 12.0% (vs. 7.1%)
  • Expense ratio: 0.91%

When Sonu Kalra took over at Fidelity Blue Chip Growth, he handed the reins of Fidelity OTC Portfolio to manager Gavin Baker. Baker’s record at OTC since taking over in July 2009 (80% of the 10-year period we examined) is a stunning 19.0% annualized. That beats the 15.2% return in the S&P 500 over the same period by an average of 3.7 percentage points per year. Wow. To be fair, the fund’s mandate is to beat the Nasdaq Composite index. OTC beats that index, too, albeit by a slimmer margin, but still by an average of 1.5 percentage points per year since July 2009.

The Nasdaq is a tech-heavy index, so it should come as no surprise that OTC has more exposure to tech stocks (55% of the fund’s assets) than other large-company growth funds (29%) and the S&P 500 (32%). OTC also has a larger proportion of its assets (more than 30%) in small and midsize companies than its peers. The combination can mean a bumpy ride: Over the past decade, for instance, OTC has been about 24% more jumpy than the typical large-company growth fund. Tesla (TSLA), Apple and Alphabet are among its biggest holdings.

 

  • The Best Way to Invest in Index Funds

3 of 3

Parnassus Endeavor

  • Symbol: PARWX
  • One-year return: 31.7% (vs. 17.9% for S&P 500)
  • Three-year return: 13.8% (vs. 9.2%)
  • Five-year return: 19.0% (vs. 14.5%)
  • 10-year return: 12.5% (vs. 7.1%)
  • Expense ratio: 0.95%

Manager Jerome Dodson is a pioneer in socially responsible investing. He founded the fund firm Parnassus in 1984, believing that stocks of companies that fit the SRI bill—those that weren’t involved in alcohol, gambling, tobacco or the like and were mindful of the environment and their employees—would beat the market. That approach has evolved over time and now wraps in environmental, social and corporate governance values (dubbed ESG for short).

Endeavor, a large-company growth fund, is what Parnassus views as its “super ESG” fund. In addition to excluding the usual suspects, Dodson also eliminates firms involved with fossil fuels. Plus, Endeavor gives extra credit to companies with good work environments. The thinking is that happy employees will help drive corporate success.

If past performance is any guide, there must be some truth to his thinking. Dodson, who has run the fund since it opened in 2005, has the winningest rolling-return record over the past 10 years of all the large-company funds we examined. His record since the fund launched beats the S&P 500 by an average of 3.9 percentage points per year. Put another way, a $10,000 investment in the fund on its opening day would be worth almost $42,000 today, 54% more than a comparable investment in an S&P 500-index fund. Biotech firm Gilead Sciences (GILD), drug and medical supply company McKesson (MCK) and Qualcomm (QCOM), best known for its semiconductor chips that power smartphones, are among the fund’s top holdings.

 

  • 7 Great Socially Responsible Mutual Funds
  • mutual funds
Share via EmailShare on FacebookShare on TwitterShare on LinkedIn

Recommended

T. Rowe Price Financial Services Banks on a Turnaround
Stock Market Today

T. Rowe Price Financial Services Banks on a Turnaround

This fund is a good way to bet on an economic rebound.
February 24, 2021
DSTL: A Value Fund With a Twist
Becoming an Investor

DSTL: A Value Fund With a Twist

The fund’s 51.3% return since its inception in 2018 has more than tripled that of traditional value funds.
February 24, 2021
2 Top-Tier T. Rowe Price Mutual Funds
mutual funds

2 Top-Tier T. Rowe Price Mutual Funds

T. Rowe Price's mutual funds typically stand out among their peers, but these two selections provide elite equity and bond exposure for this point in …
February 24, 2021
Earth-First Funds Are Soaring
Markets

Earth-First Funds Are Soaring

Funds with sustainability in mind are super popular these days; these six are ready to deliver returns.
February 24, 2021

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your stimulus checks.
February 19, 2021
Want More Tax-Free Retirement Income? One Man’s Whole Life Decision
life insurance

Want More Tax-Free Retirement Income? One Man’s Whole Life Decision

Whole life insurance might not be something that’s on your retirement planning radar, but for this client, here’s how it served his need to control ta…
February 23, 2021
The Current Plan for $1,400 Checks
Coronavirus and Your Money

The Current Plan for $1,400 Checks

Here's what you need to know about the stimulus check plan currently being considered in Congress for President Biden's COVID-relief package.
February 18, 2021
  • Customer Service
  • About Us
  • Advertise With Us (PDF)
  • Privacy Policy
  • Cookie Policy
  • Kiplinger Careers
  • Accessibility
  • Privacy Preferences

Subscribe to Kiplinger's Personal Finance

Be a smarter, better informed investor.
Save up to 76%Subscribe to Kiplinger's Personal Finance
Dennis Publishing Ltd logoLink to Dennis Publishing Ltd website
Do Not Sell My Information

The Kiplinger Washington Editors, Inc., is part of the Dennis Publishing Ltd. Group.
All Contents © 2021, The Kiplinger Washington Editors

Follow us on InstagramFollow us on FacebookFollow us on TwitterConnect on LinkedInConnect on YouTube