8 Top-Performing Large-Blend Funds
Large-blend funds offer investors broad exposure to the stock market, combining the largest growth, blend, and value companies. To screen for the top-performing funds in this category, we looked for Morningstar Medalist funds with the best returns over the last one-, three-, and five-year periods. Eight large-blend funds made it through the screen. Notably, in a category where many investors opt for index funds, only one of the top-performing funds across these three periods is passively managed.
- American Funds The Investment Company of America RICGX
- Fidelity Advisor Capital Development Fund FDETX
- Fidelity Advisor Diversified Stock Fund FDESX
- iShares US Equity Factor Rotation Active ETF DYNF
- JPMorgan US Large Cap Core Plus Fund JLPYX
- Natixis Funds Trust I US Equity Opportunities Fund NESNX
- Vanguard Growth and Income Fund VGIAX
- Vanguard Mega Cap Index Fund VMCTX
Large-Blend Funds Performance
Over the last 12 months, large-blend funds have returned 23.90%. On an annualized rate, they have returned 11.43% over the last three years and 13.07% over the last five. Meanwhile, the Morningstar US Market Index has returned 26.65% over the last 12 months, 12.55% per year over the last three years, and 14.05% per year over the last five years.
What Are Large-Blend Funds?
Large-blend portfolios are fairly representative of the overall US stock market in terms of size, growth rates, and price. Stocks in the top 70% of the capitalization of the US equity market are defined as large-cap. The blend style is assigned to portfolios where neither growth nor value characteristics predominate. These portfolios tend to invest across the spectrum of US industries, and owing to their broad exposure, the portfolios’ returns are often similar to those of the S&P 500 Index.
Screening for the Top-Performing Large-Blend Funds
To find the best large-blend funds, we looked at returns from the past one-, three-, and five-year periods using data available in Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 25% of the category using their lowest-cost primary share classes. We also filtered for funds with a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left eight names.
Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.
American Funds The Investment Company of America
Over the past 12 months, the $158.2 billion fund has gained 28.07%, while the average fund in its category is up 23.90%. The fund, launched in May 2009, has climbed 15.05% over the past three years and 14.82% over the past five.
Morningstar senior analyst Stephen Welch says: “Beating the US large-cap index is a tough task, and after years of focusing too much on capital preservation, Romo and Cambridge have steered the strategy back to its core growth of capital and income mandate. The strategy seeks a healthy mix of dividend payers and growth names, but it has had trouble in the past striking the right balance. To increase the managers’ flexibility, the co-heads decreased the strategy’s pre-yield target and expanded its eligibility list starting in 2020. They also thoughtfully added Spaly and Avzaradel to keep a healthy mix of investment styles across the team. Spaly, who used to cover top-five holding Amazon.com AMZN, likes firms with better-than-average growth prospects and durable business models, while Avzaradel favors dividend growers.”
Fidelity Advisor Capital Development Fund
The $4.9 billion fund has climbed 32.64% over the past 12 months, outperforming the average fund in its category, which rose 23.90%. The Fidelity fund, launched in December 1985, has climbed 15.76% over the past three years and 15.46% over the past five.
Morningstar strategist Robby Greengold says: “Armed with deep industry knowledge and insights from Fidelity’s sprawling team of equity analysts, manager Matt Fruhan has a fighting chance of beating the market over the long term. Since 2005, he has consistently plied a gritty approach that often embraces unloved or fundamentally challenged companies, avoids firms whose shares he thinks have been bid up by market mania, and looks for secular-growth companies whose magnitude or duration of growth is underappreciated. At the core of his bottom-up approach is the belief that the market routinely misprices companies’ earnings power over a multiyear horizon.”
Fidelity Advisor Diversified Stock Fund
Over the past 12 months, the $3.6 billion Fidelity Advisor Diversified Stock Fund rose 30.91%, while the average fund in its category rose 23.90%. The Fidelity fund, which launched in July 1970, has climbed 14.82% over the past three years and 16.82% over the past five.
Greengold says: “This strategy has shown a consistent bias toward companies with above-average earnings-growth expectations, elevated price multiples, and little dividend yield. It explains the strategy’s impressive results versus its large-blend-oriented S&P 500 benchmark during periods when growth stocks have outpaced value stocks—as they have during the full sweep of Kelley’s tenure—but has consistently lagged when growth stocks have fallen behind, such as in 2022.”
iShares US Equity Factor Rotation Active ETF
The $14.4 billion fund has climbed 30.61% over the past 12 months, outperforming the average fund in its category, which rose 23.90%. The iShares fund, which launched in March 2019, has climbed 17.25% over the past three years and 14.94% over the past five.
Morningstar analyst Ryan Jackson says: “This systematic strategy is logical but hard to execute. It aims to carve an edge by rotating through several risk factors: value, quality, momentum, size, and low volatility. These well-vetted factors have historically been tied to market-beating performance. They succeed in cycles, though, and normally on different cadences from each other. BlackRock tries to maximize exposure to the ones on the rise and fade those in decline. Its approach to do that makes sense, but practical evidence shows that factor timing strategies rarely beat traditional cap-weighted indexes in the long run.”
JPMorgan US Large Cap Core Plus Fund
Over the past 12 months, the $3 billion fund has gained 30.06%, while the average fund in its category is up 23.90%. The JPMorgan fund, which launched in November 2017, has climbed 15.81% over the past three years and 17.30% over the past five.
Morningstar director Jeffrey Schumacher says: “The strategy looks sensible and is designed to fully exploit the analyst recommendations by taking long positions in top-ranked companies while shorting stocks disliked by the analysts. Classic fundamental bottom-up research should give the fund an informational advantage, where the managers implement long and shorts through pair trades but can also apply a thematic view to generate trade ideas. Short exposure generally stands at 20%-30%, with the portfolio’s net exposure to the market kept at 100%. Although the managers have intentionally increased the portfolio’s concentration a bit since mid-2021, it remains a well-diversified and benchmark-aware portfolio, but the managers have demonstrated their ability to generate alpha through both long and short ideas generated by the analyst team.”
Natixis Funds Trust I US Equity Opportunities Fund
Over the past 12 months, the $1.2 billion Natixis Funds Trust I US Equity Opportunities Fund rose 31.02%, while the average fund in its category rose 23.90%. The Natixis fund, which launched in May 2017, has climbed 14.77% over the past three years and 15.94% over the past five.
Morningstar associate director Tony Thomas says: “The personnel are impressive. In February 2014, Natixis matched two of its affiliates’ best teams to subadvise this fund. Loomis Sayles’ team, under manager Aziz Hamzaogullari, was already plying its trade here. The early 2014 change brought aboard veteran investor Bill Nygren and his team from Harris Associates. The Loomis Sayles group is highly stable, thanks largely to Hamzaogullari’s extensive efforts to select and train his colleagues. Nygren is part of a 17-member US equity team with solid experience and rising talent in the comanager ranks.”
Vanguard Growth and Income Fund
The $15.9 billion fund has climbed 27.55% over the past 12 months, outperforming the average fund in its category, which rose 23.90%. The Vanguard fund, which launched in May 2001, has climbed 13.27% over the past three years and 14.86% over the past five.
Morningstar analyst Andrew Redden says: “The replacement of Vanguard’s quant team with fundamental manager Wellington in August 2023 has enhanced the strategy’s appeal, although the portfolio remains rather sprawling. Wellington applies a fundamental approach and oversees roughly one-third of the strategy’s assets. This change moved the strategy away from its purely quantitative roots. Nearly a year after the change, the strategy’s sector bets and differentiation from its S&P 500 benchmark have noticeably increased. However, constraints imposed by Vanguard on each subadvisor and the still-sprawling nature of the total portfolio (it held more than 800 stocks in March 2024) hold it back somewhat.”
Vanguard Mega Cap Index Fund
Over the past 12 months, the $6.7 billion Vanguard Mega Cap Index Fund rose 27.74%, while the average fund in its category rose 23.90%. The Vanguard fund, launched in February 2008, has climbed 13.75% over the past three years and 15.30% over the past five.
Morningstar associate analyst Mo’ath Almahasneh says: “The bedrock of this strategy is its market-cap weighting approach, which harnesses the market’s collective wisdom of each holding’s relative value with the added benefit of low turnover and trading costs. It’s a sensible approach because the market tends to do a good job pricing mega-cap stocks. The companies in this portfolio attract liquidity and widespread investor attention such that prices reflect new information quickly.”
This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.
