10 funds that beat the S&P 500 by over 20% in 2023 - Fund Selector Asia (2024)
A standout year of strong returns for US equities would have been a surprise to many market participants at the start of 2023, since a recession was widely anticipated by economists at the time.
This is because when the US Federal Reserve continued to raise interest rates to combat inflation over the course of 2023, it not only reduced stock valuations, but also increased the likelihood of an economic slowdown.
So, when the S&P 500 index finished the year with a 26.29% return, many active fund managers might have been caught off guard.
Out of 282 funds available for distribution in Singapore with at least a one-year track record, less than half managed to beat the S&P 500 index.
Even fewer strategies (16) managed to beat the Russell 1000 Growth index return of 42.68% – another widely used benchmark favored by growth fund managers. None outperformed the NASDAQ 100 index return of 55.13%.
However, 10 actively managed strategies stood out last year with returns more than 20 percentage points above the S&P 500 index. Below are the 10 strategies, according to data compiled from FE fundinfo.
Fund
2023 performance (%)
3yr performance (%)
5yr performance (%)
PGIM Jennison US Growth
53.47
4.17
114.9
BlackRock GF US Growth
52.68
6.37
92.91
MS INVF US Insight
52.26
-47.18
34.65
Sands Capital US Select Growth Fund
51.3
-20.88
76.97
Natixis Loomis Sayles US Growth Equity
49.56
26.07
111.67
T. Rowe Price US Blue Chip Equity
49.54
5.81
81.57
MS INVF US Growth
49.29
-40.36
62.08
New Capital US Growth
48.68
17.87
N/A
T. Rowe Price US Large Cap Growth Equity Fund
48.64
12.71
98.92
Baillie Gifford Worldwide US Equity Growth
46.58
-40.55
N/A
Most of the best performing were those that suffered heavily during the difficult year of 2022 where most asset classes slumped as the Fed embarked on its interest rate hiking cycle.
The highest performing fund in the list was the $116m PGIM Jennison US Growth fund, managed by Blair Boyer, Natasha Kuhlkin and Kathleen McCarragher.
The strategy was up 53.47% in 2023, after a 39.83% loss in 2022. Over a five-year period ending 2023, the strategy was up 114.9% versus a 107.21% return from the S&P 500 index.
The fund benefitted from its underweight position in Apple, which lagged the performance of the other big tech companies last year, and an overweight position in Eli Lilly, which performed exceptionally well on the back of its popular selling obesity drug.
The second highest performing fund in the list was the $395m BlackRock US Growth fund, managed by Phil Ruvinsky and Caroline Bottinelli.
The strategy was up 52.68% last year, after a 40.57% loss in 2022. Over a five-year period ending 2023, the strategy was up 92.91% – lagging the S&P 500 index return of 107.21%.
However last year the fund benefitted from its overweight positions in semiconductor firms Nvidia, Broadcom and Cadence Design Systems – all of which were up significantly in 2023.
Another notable fund in the list is the $3.1bn Natixis Loomis Sayles US Growth Equity fund, managed by Aziz Hamzaogullari.
The strategy was up 49.56% last year, following a 28.2% loss in 2022 – a relatively lower loss compared with funds in the list above. Over a five-year period ending 2023, the strategy was up 111.67%.
The fund has benefitted from its overweight positions in Nvidia, Tesla, Alphabet and Meta which all performed well in 2023.
SPY, VOO and IVV are among the most popular S&P 500 ETFs. These three S&P 500 ETFs are quite similar, but may sometimes diverge in terms of costs or daily returns. Investors generally only need one S&P 500 ETF.
SPY, VOO and IVV are among the most popular S&P 500 ETFs. These three S&P 500 ETFs are quite similar, but may sometimes diverge in terms of costs or daily returns. Investors generally only need one S&P 500 ETF.
The answer: RSP has outperformed the S&P 500 by 0.57% on an annualized basis since the ETF's inception two decades ago. Source: Morningstar Direct. Data begins at RSP inception date of April 24, 2003, through September 30, 2023.
Here are 5 mutual fund schemes with highest 3-year returns along with their expense ratios: Quant Small Cap Fund(G) tops the chart with over 39% returns followed by Quant Mid Cap Fund(G), Nippon India Small Cap Fund(G), Quant Flexi Cap Fund(G) and Motilal Oswal Midcap Fund-Reg(G) in the same pecking order.
These include JM Value Fund, Nippon India Value Fund and Aditya Birla Sun Life Pure Value Fund and Axis Value Fund. Some multi cap mutual funds gave returns as high as 38-40 percent which include HDFC Multi Cap Fund, Kotak Multicap Fund, ITI Multi Cap Fund and Nippon India Multi Cap Fund.
Any stock fund manager can top the benchmark S&P 500 in any given year. But the best funds have a proven investment strategy and performance record. These are the funds that consistently post benchmark-beating returns over periods ranging from a year to a decade.
Exchange-traded funds (ETFs) and index funds are similar in many ways but ETFs are considered to be more convenient to enter or exit. They can be traded more easily than index funds and traditional mutual funds, similar to how common stocks are traded on a stock exchange.
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
On average, the Fidelity Contrafund has beaten the S&P 500 Index by 2.57% per year. Growth of $10,000 invested in Contrafund versus S&P 500 Index, September 17, 1990 to December 31, 2023. Total value December 31, 2023 for Contrafund was $637,227, compared to $296,182 for the S&P 500 Index.
With those trends likely reversing, small caps could outperform the S&P 500 by a nice margin over the next decade. To invest in US small caps, consider the Schwab US Small-Cap ETF (SCHA; 0.04%) if you're US-based, and the SPDR Russell 2000 US Small Cap UCITS ETF (R2US; 0.3%) if you're based in Europe.
Since the average mutual fund doesn't beat the market most of the time, the ability to regularly beat the competition can also imply the ability to regularly beat the market, or at least match it.
Last year, 47% of actively managed open-end mutual funds and exchange-traded funds beat their benchmarks - a marked increase over the 43% hurdle rate in 2022. Morningstar refers to the boost as a "surge." Yet active managers haven't become better at beating the market over the long term, as Morningstar acknowledges.
A significant portion of actively managed mutual funds failed to outperform their benchmark indexes in 2023, , according to SPIVA Year-End 2023 report.A whopping 74 per cent of actively managed mid and small-cap funds underperformed their benchmarks.
Index funds seek market-average returns, while active mutual funds try to outperform the market. Active mutual funds typically have higher fees than index funds. Index fund performance is relatively predictable; active mutual fund performance tends to be less so.
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