Although the idea of top-performing mutual funds might not seem so alluring given the post-pandemic frenzy in the capital and cryptocurrency markets, boring doesn’t always mean ineffective. Indeed, a select few funds have outperformed the benchmark S&P 500 index this year.
Fundamentally, the main advantage underlying the top-performing mutual funds is active management. Essentially, by trading in this sector, you’re part of a broader professional team dedicated to achieving the fund’s objective. Now, during decisively bullish cycles, you may be tempted to go at it alone. However, downcycles separate the wheat from the chaff.
Primarily, the top-performing mutual funds benefit from risk management protocols. With fund managers leveraging the best information and resources, they’re able to potentially make more profitable adjustments. A good way to think about this concept is a pit crew for a racing team. It can make quick changes to the car, maximizing the chances for success.
And that’s what we all may need ahead of market and economic uncertainties. On that note, below are three top-performing mutual funds to consider.
State Street U.S. Core Equity Fund (SSAQX)
Listed under the category of U.S. equity large-capitalization blend, the State Street U.S. Core Equity Fund (MUTF:SSAQX) seeks, quite simply per its prospectus, long-term growth of capital. Under normal circumstances, the fund aims to achieve its objective by investing at least 80% of its net assets in equity securities of U.S. companies.
As well, it may invest up to 15% of net assets toward foreign securities. Also, the allocation may rise up to 20% for debt securities. So far, it’s doing a solid job keeping investors happy. Since the beginning of the year, the S&P 500 index moved up under 15%. In contrast, the SSAQX gained nearly 19% during the same period.
It’s also interesting to consider the loss of the benchmark index compared to its July 31 peak, which came out to 4.5%. On the other side, the SSAQX fund lost only 2.2% in the same frame.
Cost-wise, the SSAQX features a net expense ratio of 0.16%, far lower than the category average of 0.86%. Thus, it’s a respectable choice for top-performing mutual funds.
Pear Tree Quality Fund Ordinary Shares (USBOX)
Another interesting idea for top-performing mutual funds, Pear Tree Quality Fund Ordinary Shares (MUTF:USBOX) also lands in the U.S. equity large-cap blend category. Under normal conditions, per its prospectus, the fund aims to invest at least 80% of its net assets in equity securities of U.S.-based enterprises. Specifically, it targets companies featuring a market cap of over $5 billion at time of purchase.
Notably, Pear Tree Quality Fund typically invests in American Depositary Receipts (ADRs). Also, it may invest in derivatives, which can potentially add more juice to the return in exchange for higher risk. So far, the fund management team is doing its job well. Since the beginning of this year, the USBOX carries a return of just over 20%. Again, the benchmark index is up less than 15%.
Now, USBOX hit its high this year on July 28. Since then, the mutual fund gave up 3%, which is still favorable compared to the S&P 500. However, the net expense ratio is high at 1.19%. Still, for the greater performance, it might be worth it.
Columbia Contrarian Core Fund Advisor Class (CORRX)
Last on this list of top-performing mutual funds is Columbia Contrarian Core Fund Advisor Class (MUTF:CORRX). As with the other two funds, Columbia Contrarian falls under the U.S. equity large-cap blend category. In addition, the core strategy remains the same: investing at least 80% of its net assets in U.S.-based enterprises that feature a large market cap (above $2 billion).
However, CORRX distinguishes itself through some riskier but potentially more rewarding endeavors. Per its prospectus, the fund’s investment manager seeks out individual opportunities that may be undervalued and offer the potential for long-term growth and current income. And the manager is doing the job well. Since the January opener, CORRX gained over 21% of market value.
Just like the S&P 500, CORRX hit its 2023 peak on July 31. Since then, the mutual fund dipped about 3.1%. That’s a greater loss than the other funds – due to a higher-risk profile – but the volatility is mitigated compared to the passively managed SPDR S&P 500 ETF Trust (NYSEARCA:SPY).
Finally, the expense ratio is 0.72%, which is not bad for what you’re getting.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
