Investing February 3, 2004

Half of Largest Stock Funds Beat S&P 500 Last Year

February 3, 2004 (PLANSPONSOR.com) - Only five of the 10 largest equity funds outperformed the S&P 500 in 2003, but by an amount barely enough to propel the group's average return past that of the index.
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According to Standard & Poor’s database of over 15,000 domestic mutual funds, the ten largest funds gained an average of 29% in 2003, narrowly beating the S&P 500-stock index’s 28.7% return. 

Of the five funds that bested the index in 2003, the best performer was the $26.7-billion Fidelity Low Priced Stock with a 40.9% annual return.  Fidelity’s Low Priced Stock Fund is the only small-cap fund found among the ten largest domestic equity funds. The fund normally invests 80% of its assets in low-priced stocks – priced at or below $35 per share – which generally leads to investments in small- and medium-sized companies. 

The Growth Fund of America also had a strong year.  The fifth largest domestic equity fund returned 32.90% in 2003, and has outperformed the S&P 500 four out of the last five years.

For the three-year period through year-end 2003, nine out of the ten largest funds outperformed the S&P 500 with an average annualized return of 5.3% versus 4.1% for the index. For the ten-year period through last year, six funds outpaced the index with an average annualized return of 1.2%.

The ten largest domestic equity funds with their investment style, one-year return and total net assets follows:

  • Vanguard 500 Index/Inv,   Large-Cap Blend, 28.5%, $75.34 billion
  • Fidelity Magellan, Large-Cap Blend,  24.8%, $68 billion
  • Investment Company of America Fund/A, Large-Cap Value,   26.3%, $58.35 billion
  • Washington Mutual Investors Fund/A, Large-Cap Value,  25.8%, $55.58 billion
  • Growth Fund of America/A, Large-Cap Growth, 32.9%, $48.07 billion         
  • Fidelity Contrafund,   Large-Cap Growth,   28%, $36.05 billion     
  • Fidelity Growth & Income,   Large-Cap Blend,   19%,  $30.57 billion
  • Dodge & Cox Stock Fund, Large-Cap Value, 32.3%,  $29.44 billion
  • Fidelity Low Priced Stock, Small-Cap Value, 40.9%,  $26.73 billion
  • Vanguard Total Stock Market Index/Inv, Large-Cap Blend, 31.4%, $24.06 billion.

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