On this third and final day of Presidents Day weekend, and continuing our theme of choice investments, this month's Members Only article from the AAII gives us a survey of the top mutual funds for this year. The markets are back in business tomorrow.
The Individual Investor's Guide to the Top Mutual Funds 2024
While technology took eight of the top 10 spots on the list of 2023’s best mutual funds, 35 of the 50 top performers were large-cap growth funds.
by AAII Staff | February 2024
Positive returns for 2023 were turned in by 54 out of 55 fund categories appearing here
Technology mutual funds took the top five spots among all funds for 2023
Category representation was broad among the bottom performers
In a widespread rebound from 2022’s bear market, positive returns were realized in 54 of the 55 categories included in the print and PDF versions of this guide. The only category to incur negative returns in 2023 was the utilities sector. Funds in this category lost 4.5% on average for the year.
Ultrashort, short-term, short government and municipal national bond funds enjoyed their best performance in at least five years. The returns weren’t high on an absolute basis—ranging between 3.8% on average for muni national short funds to 5.8% on average for ultrashort bond funds—but they do reflect what happened in the financial markets. The yield curve stayed inverted with short-term yields above long-term yields.
Technology was the big category winner. The tech sector’s 49.8% return was driven by the exceptional performance of Magnificent Seven stocks such as Alphabet Inc. 
(GOOGL), Apple Inc. (AAPL), Microsoft Corp. (MSFT) and Nvidia Corp. (NVDA).
As impressive as last year’s gain in technology funds was, it wasn’t large enough to bring investors back to breakeven. The technology sector was 2022’s biggest loser with a 37.2% plunge. An investor who put $1,000 into a representative tech fund at the end of December 2021 would have had approximately $940 at the end of 2023.
Still, the widespread rebounds in mutual funds were welcome news for investors. Fifty-two of the 55 fund categories fell in 2022 as both the equity and bond markets declined.
Mutual fund investors had the added bonus in 2023 of generally modest taxable distributions. The number of estimated taxable distributions that were over 10% of a fund’s net asset value (NAV), as tabulated by CapGainsValet, was just 78 as of mid-December 2023. This was the lowest number since 2014. Average tax-cost ratios in 2023 were below their respective three-year averages for nearly three-quarters of the categories in our overall fund universe. (The tax-cost ratio measures how much a fund’s annualized return is reduced by the taxes paid on distributions, assuming the maximum marginal tax rate.)
Despite these positives, investors continued to pull their dollars out of mutual funds. LSEG Lipper Alpha Insight said in January 2024 that domestic equity funds incurred their 100th consecutive week of net outflows. (Net flow is the difference between new purchases by investors and net redemptions by investors.) It is unclear how much of these outflows have been reallocated to exchange-traded funds (ETFs) because of the differences between the two fund types.
View All Funds With Detailed Data
Expanded Fund Data interactive lists of funds by category and detailed data on each fund. Spreadsheets for each asset class can be accessed under Expanded Fund Listings.
Performance Tables
Table 1. Top 50 Mutual Fund Performers for 2023 lists the 50 best-performing funds of 2023.
Table 2. Bottom 50 Mutual Fund Performers for 2023 lists the 50 worst-performing funds of 2023.
Table 3. Performance of the 50 Most Widely Held Mutual Funds allows you to compare the performance of the 50 most widely held funds (funds with the highest total assets).
While past performance is no indication of future performance, it may attest to the quality and consistency of fund management.
Technology Tops All in Performance
Table 1 shows the 50 top-performing no-load funds for 2023. Technology mutual funds took the top five spots. The category claimed eight of the top 10 spots overall. Large growth funds were the most populous with 35 funds from this category appearing on this list.
To put these numbers in perspective, there were 16 funds in the technology category that met the base criteria for consideration. More than 60 large-cap growth funds were eligible.
The Fidelity Select Semiconductors fund (FSELX) took the top-performer crown with a 78.1% gain for 2023. This more than reversed 2022’s 35.2% drop for the fund. This actively managed fund was aided by its largest holding, Nvidia. The stock more than tripled in value as investors became focused on the prospects for artificial intelligence (AI). Fidelity Select Semiconductors has A+ Investor Grades of A for its three-, five- and 10-year annualized returns. The fund is highly volatile with a total risk index of 2.52. Its expense ratio of 0.69% is among the lowest in its category.
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The Nationwide Bailard Technology & Science fund (NWHQX) is a broader technology fund. It seeks companies that are impacted by critical technological innovations that may drive future growth. The fund has A+ Investor Grades of B for its three-, five- and 10-year returns. The fund’s expense ratio of 0.91% earns it a grade of B.
The Fidelity Blue Chip Growth fund (FBGRX) ranks ninth in Table 1. The large-cap growth fund rebounded to a positive 55.6% return in 2023 after falling by 38.5% in 2022. As its name implies, this actively managed fund seeks blue-chip companies with above-average growth potential. Fidelity Blue Chip Growth has realized above-category-average returns during eight of the last 10 years. It only lagged in 2016 and 2022. The fund’s expense ratio of 0.69% earns it a grade of B.
Mixed Categories Represented Among Bottom Performers
Unlike the top performers, category representation was much broader among the bottom performers. Funds from 25 different categories appear in Table 2.
The requirement of having an expense ratio at or below the category average played a role. We include this requirement when screening for the top performers. It is also used for the bottom performers. More funds with 2023 losses would have appeared on this list had this criterion not been used, though there still would have been some funds with positive returns on the list.
Three China region funds had double-digit losses in 2023. Matthews China Dividend Investor (MCDFX), Matthews China Investor (MCHFX) and AMG Veritas China Class N (MMCFX) incurred losses of 20.7%, 19.2% and 18.4%, respectively. Last year was the third consecutive year with negative returns for all three funds. Previous pandemic lockdowns and continued headwinds (real estate, trade wars, slowing growth, etc.) have weighed on Chinese stocks. All three funds are actively managed and have similar expense ratios, though Matthews China Dividend Investor has an explicit quality requirement.
Even With Shifts, Vanguard Funds Remain the Most Widely Held
Table 3 highlights the 50 most widely held funds. These are the funds most likely to be in individual investors’ portfolios.
Vanguard continues to dominate the list with 37 funds. Considerations given to share class assets caused some funds on 2023’s most widely held list to be excluded from 2024’s list. Other requirements include no loads, no institutional funds and no special share classes (e.g., adviser, retirement, etc.). Only admiral share classes are shown for Vanguard funds that have both admiral and investor class shares.
The Vanguard Total Stock Market Index Admiral fund (VTSAX) remains the most widely held fund with $1.41 trillion in total assets under management. This is a market-capitalization-weighted fund that holds over 3,700 stocks. The admiral share class’ expense ratio is just 0.04%.
The Vanguard Growth Index Admiral fund (VIGAX) moved up a few spots to the sixth-most widely held fund. This is attributable to the outperformance of growth stocks last year.
Fidelity followed Vanguard with eight funds. The Fidelity Contrafund (FCNTX) is the most widely held, low-cost, no-load actively managed fund that is available to individual investors. It ended 2023 with $117 billion in assets under management.
There are two Dodge & Cox funds on this list: Dodge & Cox Income I (DODIX) and Dodge & Cox International Stock I (DODFX). Dodge & Cox Income I is the only actively managed intermediate-term bond fund among the most widely held funds.
This Year’s Guide
This year’s mutual fund guide continues to make use of the data and tools available to members on AAII.com. They include our mutual fund grades and category averages.
The category averages provide a peer-based benchmark to compare a given fund against. They allow you to quickly see if a fund is more attractive or less attractive than all other funds in a particular category.
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The grades range from A to F. The scale works just like it did when you were in school: A’s are good, while F’s are bad. Each of these grades is tied to a percentile rank based on how a specific fund compares to its category peers. A fund’s average annual return for a given period that ranks in the top quintile (best 20%) relative to that of its category peers will receive a grade of A. Lower grades are assigned for lower quintile rankings. So, a grade of C means that the fund’s average annual return for a certain period was about average relative to that of its category peers (the 41st to 60th percentile).
Members using the online version of this guide can access data on more than 23,000 mutual funds on AAII.com. This large universe includes the no-load funds widely available to most individual investors as well as institutional and special share class funds. The latter may only be available through workplace retirement plans [e.g., 401(k) plans] and/or through brokers and financial advisers. Go to www.aaii.com/guides/mfguide to access the expanded online version of the guide.
Our mutual fund data is updated monthly. Spreadsheets can be downloaded by clicking on the “Excel” button located at the top of the online mutual fund table.
AAII members reading either the print or PDF version of this guide will see key mutual fund data presented on a single page. Approximately 370 mutual funds from a wide range of asset classes, fund groups and categories are covered in the print and PDF versions.
All AAII members have the ability to track the mutual funds they own in our My Portfolio tool on AAII.com. Clicking on a fund’s name or ticker (or typing either into the search box located at the top of most pages on our website) will call up our mutual fund evaluator. This page provides the valuable fund information and data that you are most interested in. It’s a very helpful tool for conducting mutual fund research.
Which Mutual Funds Were Included?
The mutual funds that appear in this guide were selected from the universe of open-end funds tracked through Nasdaq. The following are the various screens we used for the final selection of which funds to include in the print and the PDF versions of this guide.
Categories
The starting point for determining which categories to include is the fund groups matching the AAII Asset Allocation Models. The stock and bond mutual funds comprising these groups are also the most frequently found in individual investors’ portfolios. We then expanded the list of fund categories to cover those of interest to a large number of investors or that are commonly found in workplace retirement plans. This latter group includes sector funds, high-yield bond funds, allocation funds and target-date funds.
Historical Record
Only those mutual funds with three full years of data are included in Table 4. This requirement ensures that there is a performance record of significant length and that all performance measures can be calculated. This requirement was loosened for the listings of the best- and worst-performing funds (Tables 1 and 2).
Size
Funds must appear in the Nasdaq mutual fund listings. Funds are generally required to have at least $1 billion in assets. A smaller size requirement is used for the top- and bottom-performing fund listings (Tables 1 and 2).
Loads
Only no-load mutual funds are included. Funds charging a load are excluded because of the large number of no-load funds available to individual investors and the drag on returns a front-end or back-end fee can have. Share classes more likely to have 12b-1 fees are also excluded.
Expenses
Funds with significantly higher expense ratios than the average for their category are generally excluded.
Performance
For the most part, funds that significantly underperformed compared to the average performance of funds in their category are not included. Exceptions were made for funds of significant size.
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Interest and Availability
Only those funds that are of general interest to mutual fund investors and available for investment by individual investors directly from the fund, without restrictions, are included in the print/PDF version of this guide. If a fund family offers multiple no-load classes of its funds, the investor or retail class is presented.
Go to AAII.com for Information on More Funds
Performance figures for mutual funds that do not appear in the print version of this guide can be accessed at www.aaii.com/guides/mfguide, where data on over 23,000 funds can be found. These include funds sold exclusively through advisers and those designated with special share classes, such as retirement.
Additional analysis can be conducted with our Compare Funds tool, found at www.aaii.com/funds/compare. You can use it to compare and contrast return, risk and turnover information for two or more funds. You can also track the funds you own or are most interested in with My Portfolio.
More Funds and Expanded Data Online at www.aaii.com/guides/mfguide
- 23,000+ funds
- More grades for performance, risk and expense
- Portfolio composition
- Additional risk figures
- Manager tenure
- Loads and 12b-1 fees
- Contact info
Plus,
- Check box to quickly compare funds
- Filter funds by category
- Sort by any data field
- Definitions of terms
- Downloadable Excel file
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