5 Top-Performing Large-Growth Funds
Large-cap growth funds can provide a convenient way for investors to own the largest, fastest-growing companies that often dominate the headlines. To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. Among the ranks of large-growth funds, offerings from Fidelity stood out, making up two of the top five.
- Fidelity Advisor New Insights Fund FZANX
- Fidelity Contrafund FCNKX
- Loomis Sayles Growth Fund LGRNX
- Vanguard Growth Index Fund VUG
- Vanguard Mega Cap Growth Index Fund VMGAX
Large-Growth Funds Performance
Over the past 12 months, large-growth funds have returned 16.77%. On an annualized rate, these funds have returned 18.15% over the past three years and 15.91% over the past five years. That compares with the Morningstar US Market Index, which has returned 13.92% over the past 12 months, 14.96% per year over the past three years, and 17.26% per year over the past five years.
What Are Large-Growth Funds?
Large-growth funds invest in big US companies that are projected to grow faster than their large-cap peers. Stocks in the top 70% of the US equity market are defined as large-cap. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields). Most of these portfolios focus on companies in rapidly expanding industries.
Screening for the Top-Performing Large-Growth Funds
To find the best large-growth funds, we looked at returns data 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 for those periods. 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 five funds.
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.
Fidelity Advisor New Insights Fund
Over the past year, the $20.2 billion Fidelity Advisor New Insights Fund rose 18.94%, while the average fund in its category rose 16.77%. The Fidelity fund, which launched in August 2013, has climbed 21.54% over the past three years and gained 18.27% over the past five years.
“We have qualitatively reviewed this strategy and reaffirmed its Process and People ratings. Fidelity Advisor New Insights remains in good hands. The remainder of this analysis is from Feb. 5, 2024. The fund benefits from the experience of Will Danoff. He runs the bulk of its assets in a similar manner to Fidelity Contrafund FCNTX, which under his leadership has excelled across multiple market cycles, including recent ones. Granted, favorable market conditions of late have kept the strategy from getting bogged down. Mega-cap stocks such as those featured in this portfolio have trounced mid- and small-cap stocks. In an environment where those roles are reversed, this strategy’s results may look more pedestrian.
“Co-manager Nidhi Gupta, a Fidelity veteran but relative newcomer to diversified portfolio management, has discretion over 40% of the fund’s assets and looks for firms with large total addressable markets and stock prices that don’t reflect their long-term earnings power. Since joining the fund in mid-2020, the strength of her execution has been hard to discern. Most of her portfolio overlaps Danoff’s, and some of the holdings under her management have weighed on the fund’s results. Overall, this fund has performed slightly worse than Fidelity Contrafund over the past three years. Even so, her ample industry experience, which includes time focusing on technology and communication services stocks, should work in the strategy’s favor.”
—Robby Greengold, principal, equity strategies
Fidelity Contrafund
Over the past year, the $145.1 billion fund has gained 19.74%, while the average fund in its category is up 16.77%. The Fidelity fund, which launched in May 2008, has climbed 22.55% over the past three years and gained 18.70% over the past five years.
“The exceptional skill of Fidelity Contrafund’s portfolio manager outweighs the disadvantages of its massive asset base, and it has been helped recently by a sizable position in Meta Platforms. The remainder of this analysis is from Feb. 5, 2024.
“Will Danoff has successfully steered this diversified strategy through multiple market cycles, including recent ones. It’s a particularly impressive feat, given the strategy’s colossal asset base of more than $200 billion across all accounts, which has long limited its flexibility. Danoff looks for best-of-breed companies with competitive advantages, improving earnings potential, and capable leadership.
—Robby Greengold, principal
Loomis Sayles Growth Fund
Over the past year, the $15.9 billion fund has gained 22.35%, while the average fund in its category is up 16.77%. The Natixis fund, which launched in February 2013, has climbed 25.13% over the past three years and gained 18.56% over the past five years.
“Loomis Sayles Growth, a US mutual fund also available in separate accounts and related cross-border offerings, has an exceptional manager who has carefully crafted a loyal team and an admirable approach. The strategy earns a People rating upgrade to High from Above Average; its Process rating remains at High.
“Manager Aziz Hamzaogullari deserves a lot of the credit. More than two decades ago, he outlined the basics of what became a seven-step research process that favors firms that produce reliable free cash flow growth because they have solid competitive advantages. Many investors talk that way, but Hamzaogullari and his eight-person team rise above the din of markets with their extensive research and patient investing. They seek the right businesses at the right prices. Rarely do they fiddle with holdings and share counts.”
—Tony Thomas, associate director
Vanguard Growth Index Fund
Vanguard Mega Cap Growth Index Fund
The $269.3 billion Growth Index Fund has climbed 20.00% over the past year, outperforming the average fund in its category, which rose 16.77%. The fund, launched in January 2004, has climbed 20.69% over the past three years and 18.66% over the past five.
Over the past year, the $23.2 billion Mega Cap Growth Index Fund has gained 20.54%. The fund, launched in April 2008, has climbed 21.58% over the past three years and 19.35% over the past five.
“Vanguard Growth Index effectively represents the contours of the large-cap growth market, but that means it holds a highly concentrated portfolio. Its low cost helps remedy that shortcoming and makes it a compelling option. The fund tracks the CRSP US Large Cap Growth Index, a market-cap-weighted bogy that captures the growth-oriented side of the large-cap market. Market-cap-weighting is an efficient way to size holdings because it harnesses the market’s consensus opinion of each stock’s relative value. Concentration is the most important risk potential investors should be aware of.
“Long term, investors should expect periods of outperformance when the largest stocks lead the charge. But those stocks can leave the portfolio vulnerable from time to time, potentially resulting in greater losses than better-diversified peers during broad declines.”
—Zachary Evens, analyst
This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.
