2024 was a banner year for those who invested in the most widely held stock funds, with many of the largest index funds outperforming the competition.
For actively managed strategies, performance often came down to their exposure to a handful of the biggest stocks. Among the largest actively managed stock funds, the $155 billion Fidelity Contrafund FCNKX, with its huge stake in Meta Platforms META, ranked among the best performers within its category, while the $91 billion American Funds AMCAP RAFGX continued to struggle. On the index fund side, eight out of the 10 largest passive stock funds landed in the top third of their category. S&P 500 index funds were especially strong; only the $320 billion Invesco QQQ Trust QQQ ranked in the bottom half of its category.
In the background, the funds with the heaviest tilt toward growth stocks fared best, even as the stock market’s rally somewhat broadened from the handful of mega-sized tech companies that led much of the bull market.
For this article, performance data is based on the lowest-cost share class for each fund. Some funds may be listed with share classes inaccessible to individual investors outside retirement plans. 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. In some cases, the lowest-cost share class may be newer than the fund, so gaps in longer-term data reflect the recency of the share class and not the fund itself, which may have older but higher-cost share classes.
How the Largest US Stock Index Funds Performed in 2024
The 10 largest US stock index funds rode the bull market rally higher in 2024. Only the Invesco QQQ Trust underperformed its category average, with a 29.2% gain vs. a 30.1% gain for the average large growth fund.
In terms of absolute performance, growth funds outperformed value and blend funds. The overall best performer was Vanguard Growth Index VIGIX, which returned 35.5%, landing it in the 34th percentile for the large growth category.
Out of the largest US stock index funds, four of the top five best performers in their categories based on 2024 returns tracked the S&P 500.
“The S&P 500 has proven very difficult to beat,” says Bryan Armour, director of passive strategies research for North America at Morningstar. This is borne out in an analysis Armour did in 2023 looking at the SPDR S&P 500 ETF Trust SPY, the largest S&P 500 index ETF. “Since its inception, SPY outperformed 71% of U.S. equity funds available in 1993 that had survived, while only 24% of those funds remained open today. SPY jumps up to the top sixth percentile of funds since its inception after accounting for those that died,” Armour wrote in his 2023 analysis.
How the Largest Active US Stock Funds Performed in 2024
For the largest active US stock funds, the biggest differentiator for performance was exposure to some mega-cap names that led the stock market higher in 2024.
The clearest example is Fidelity Contrafund, which sports a 15.7% weight in Meta. “Fidelity Contrafund’s huge exposure to Meta was by far the biggest driver of its outperformance in 2024,” says Morningstar strategist Robby Greengold. “For the year to date through Dec. 18, the stock climbed by more than two-thirds as it occupied around 15% of the fund’s assets,”
Another winner in 2024 was the JPMorgan Large Cap Growth fund JLGMX. “The team has delivered strong results in 2024 through September, driven largely by stock selection,” says Morningstar manager research analyst Andrew Redden. “Industrials and healthcare picks have particularly stood out, while overweight positions in high-conviction names like Eli Lilly LLY, Meta, and Netflix NFLX have provided meaningful tailwinds.”
Two funds out of the 10 performed in the bottom quartile of their categories: American Funds Washington Mutual R6 RWMGX and American Funds AMCAP R6 RAFGX. “AMCAP has been light on mega-cap stocks, so underweights in Nvidia and Amazon AMZN hurt the strategy this year,” says Morningstar analyst Stephen Welch. He also mentioned that the Washington Mutual fund was “light on mega-caps, so underweighting Nvidia and Amazon hurt.”
The Long-Term Performance of the Largest US Stock Index Funds
The 10 largest index funds’ performance in 2024 looks very similar to their five-year rankings. Only three differ by more than 5 points in percentile ranking. The biggest difference came with the Invesco QQQ Trust. That fund ranked 71st in the large-growth category based on 2024 returns, while it’s in sixth place based on five-year returns. The fund was weighed down by Intel INTC, Adobe ADBE, and Advanced Micro Devices AMD, all of which fell by double digits in 2024, costing it 1.8 points of return.
The Long-Term Performance of the Largest Active US Stock Funds
Mega-cap stocks that helped determine the best and worst performers in 2024 have also been major determinants of these funds’ longer-term performance. “Meta and Netflix have been among [Fidelity Contrafund portfolio manager] Will Danoff’s best picks over the past decade. He has held both for at least that long,” says Greengold.
For JPMorgan Large-Cap Growth, the “long-term success owes much to an approach centered on identifying promising growth opportunities early, then steadily increasing exposure as the market acknowledges their potential,” says Redden. “The team’s track record speaks for itself: Nvidia was added in 2016, Tesla TSLA in 2013, Amazon in 2007, Meta in 2013, and Apple AAPL as early as 2005.”
Meanwhile, being underweight in those stocks has proved a difficult hurdle. “AMCAP has struggled the past 10 years or so because of this underweight to mega-caps,” says Welch. “Washington Mutual is less volatile than the index, so its risk-adjusted results look much better. While its underweight to mega-caps has hurt more recently, over the longer term, risk-adjusted results are solid, while absolute [returns] look worse.”
This article was generated with the help of automation and reviewed by Morningstar editors.
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