Mutual funds are investment vehicles that offer an opportunity to gain exposure to a wide portfolio of assets. They’ve grown in popularity owing to their ability to invest in a diversified collection of assets at some of the lowest costs. Nevertheless, it was a painful 2022 as mutual funds underperformed due to extreme market volatility. Losses across the MF segment were severe and widespread as US equities bonds and other securities came under pressure amid an uncertain monetary policy cycle.
Most mutual funds were pushed to the wall due to many economic factors. Rising interest rates in the race to lower inflationary pressure was one of the biggest factors that hit many equities and other securities, hurting mutual funds’ performance. Recessionary pressure also hurt investors' sentiments, with Ost opting to stay in cash.
Some of the mutual funds that track the S&P 500, including SPDR S&P 500 ETF SPY and Fidelity 500 Index FXAIX, posted double-digit percentage losses. Mutual funds that tracked indexes comprised of US stocks performed poorly, especially those with exposure to small company stocks. For instance, the Vanguard Total Stock Market Index fell 19.6% in 2022.
Likewise, high-flying mutual funds with exposure to high-flying stocks like Amazon, Tesla, and Meta was also in the red. Invesco QQQ Trust (NASDAQ:QQQ) was down by about 32%, its worst performance since 2008. On the other hand, funds with value tilting stratifies, and those with exposure to energy stocks outperformed, buoyed by a spike in energy prices.
Fast forward, mutual funds have recouped a significant amount of the losses accrued in 2022. The bounce back of the equity markets and other sectors has reinvigorated sentiments in the segment. Likewise, investors are increasingly turning their attention to first-rate mutual funds, given their diversified holdings that offer exposure to various sectors.
In addition to offering exposure to equities, large-cap mutual funds also invest in bonds, foreign and global securities, thus the reason they are cherished by investors looking to diversify their investment portfolios. Large-cap mutual funds also offer exposure to growth and value stocks of all different sizes by market capitalization.
10 Best Growth Mutual Funds and Their Latest Top Picks
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Mutual funds offer an opportunity to invest in professionally managed funds with diversified portfolios, which in most cases would be difficult with limited capital. However, caution is of utmost importance when selecting a fund. While choosing a fund based on its investment strategy and the assets it invests in it is also vital to watch closely the cost structure focusing on net expense ratio.
Likewise, it is important to keep an eye on the funds’ performance over the years and whether they always outperform the overall market. It is the only way one would be guaranteed of sizeable returns.
Our Methodology
Our list of the top 10 best growth mutual funds comprises funds that have delivered significant growth over the past ten years and continue to do well amid the bull market. The list comprises of large mutual funds in addition to value bond and dividend funds. We ranked the funds based on their ten-year returns on MorningStar while also considering their biggest holdings and net expense ratio.
Best Growth Mutual Funds and Their Latest Top Picks
10. Baron Focused Growth Fund (NASDAQ:BFGFX)
10-year return: 16.26%
Year-to-date return: 26.60%
Net expense ratio: 1.32%
Baron Focused Growth Fund (NASDAQ:BFGFX) is a mutual fund that focuses mainly on small and mid-sized companies in the US with significant growth potential. While focusing on long-term returns, the funds seek capital appreciation above everything.
Consumer cyclical accounts for the biggest portion of the fund’s holdings, followed by financial services and real estate. Some of the fund's biggest holdings are in Tesla, Arch Capital Group and Hyatt Hotels Corporation (NYSE:H). Baron Focused Growth Fund (NASDAQ:BFGFX) has gained about 26.60% year to date and boasts of a ten-year average return of 16.26%. Its net expense ratio stands at 1.32%.
9. Oberweis Micro Cap Fund (NASDAQ:OBMCX)
10-year return: 16.36%
Year-to-date return: 21%
Net expense ratio: 1.53%
Oberweis Micro Cap Fund (NASDAQ:OBMCX) is a mutual fund highly suited for investors eyeing exposure to micro-cap growth companies and looking to enjoy capital appreciation. Under any given circumstance, the fund invests about 80% of its holdings in very small companies with a market capitalization of less than $600 million.
It also focused on companies that management believes have the potential for significant long-term growth in market value. Technology stocks account for the biggest share of holdings at 35%, followed by healthcare at 16% and Industrials at 15%.
Oberweis Micro Cap Fund (NASDAQ:OBMCX)'s biggest holdings include Axcelis Technologies, Inc. (NASDAQ:ACLS), Aehr Test Systems (NASDAQ:AEHR), and Perion Network Ltd. (NASDAQ:PERI). The fund boasts of an average return of 21% year to date, with a ten-year return of 16.36%. It has a high net expense ratio of 1.53%.
8. Fidelity Blue Chip Growth Fund (NASDAQ:FBGRX)
10-year return: 16.47%
Year-to-date return: 42.68%
Net expense ratio: 0.76%
Fidelity Blue Chip Growth Fund (NASDAQ:FBGRX) is a fund that invests purely in companies with a market cap of more than $10 billion, which fund managers believe are poised for tremendous growth. Some critical metrics analyzed before investing include revenue growth rate and earnings growth. Therefore, the fund mostly focuses on generating capital rather than income.
The mutual fund invests at least 80% of its portfolio in blue chip companies, with tech plays accounting for about 44%, Consumer cyclical at 20%, and communication services at 13%.
Some of its biggest holdings are Apple Inc. (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) stocks. The bets on solid tech plays explains the funds 42.68% year-to-date gain. Fidelity Blue Chip Growth Fund (NASDAQ:FBGRX) boasts of a 10-year average return of 16.47%. Its next expense ratio stands at 0.76%.
7. Fidelity OTC Pt (NASDAQ:FOCPX)
10-year return: 16.88%
Year-to-date return: 31.49%
Net expense ratio: 0.81%
Fidelity OTC Pt (NASDAQ:FOCPX) is a mutual fund seeking capital appreciation by investing in common stocks listed in the Nasdaq 100 index or stocks trading on the counter market. Consequently it offers exposure to small and medium-sized companies.
Technology stocks account for about 44% of the fund's total weight, with the consumer service sector accounting for 19.4% and the Consumer cyclical 14%. Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG) stocks account for more than 35% of the fund’s total weight.
Increased focus on tech stocks has seen Fidelity OTC Pt (NASDAQ:FOCPX) return about 31.49% year to date, the ten-year average return of 16.88%. Its net expense ratio stands at 0.81%.
6. Rydex NASDAQ-100 Fund (NASDAQ:RYOCX)
10-year return: 17.31%
Year-to-date return: 40.74%
Net expense ratio: 1.24%
Rydex NASDAQ-100 Fund (NASDAQ:RYOCX) is a mutual fund that deploys an investment strategy of investing in common stock that provides investment results corresponding to the Nasdaq 100 before fees and expenses.
Therefore, it invests 80% of its assets in securities of companies whose performance is likely to correspond to the underlying index's. Its biggest holdings are in the technology sector, followed by communication services and consumer cyclical.
Rydex NASDAQ-100 Fund (NASDAQ:RYOCX) has invested nearly a third of its total eight in Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN). It enters expense ratio stand at 1.24%. The fund is up 40.74%, year to date and ten year average of 17.31%
