For all the ink that’s been spilled about small, undiscovered mutual funds, most people simply own the ones that are in their 401(k) savings plan. And, by and large, those are very big, long-ago discovered funds.
This is not a bad thing, necessarily. Some funds, like Fidelity Contrafund or the American Funds Growth Fund of America, have gotten big because they have had good returns over time. Others, such as Fidelity Magellan, are big because they once had had good performance, but shareholders haven’t become entirely disillusioned.
So how well is your big fund doing? On average, reasonably well in this kidney stone of a market. The table below gives you the answer. Skip below the table for a few observations.
|Name||Ticker||Morningstar Category||Total return (YTD)|
|Vanguard Total Stock Mkt Idx Inv||VTSMX||Large Blend||2.5%|
|Vanguard 500 Index Inv||VFINX||Large Blend||2.4%|
|Vanguard Institutional Index I||VINIX||Large Blend||2.5%|
|American Funds Growth Fund of Amer A||AGTHX||Large Growth||6.4%|
|Fidelity® Contrafund®||FCNTX||Large Growth||7.7%|
|Fidelity Spartan® 500 Index Inv||FUSEX||Large Blend||2.4%|
|American Funds Washington Mutual A||AWSHX||Large Value||0.1%|
|American Funds Invmt Co of Amer A||AIVSX||Large Blend||1.9%|
|American Funds Fundamental Invs A||ANCFX||Large Blend||3.3%|
|Vanguard Mid Cap Index I||VMCIX||Mid-Cap Blend||3.9%|
|Dodge & Cox Stock||DODGX||Large Value||0.7%|
|Vanguard Small Cap Index Inv||NAESX||Small Blend||2.1%|
|Vanguard Growth Index Inv||VIGRX||Large Growth||5.2%|
|Vanguard Windsor™ II Inv||VWNFX||Large Value||1.1%|
|American Funds AMCAP A||AMCPX||Large Growth||4.5%|
|T. Rowe Price Growth Stock||PRGFX||Large Growth||11.6%|
|Vanguard PRIMECAP Inv||VPMCX||Large Growth||1.5%|
|Vanguard Extended Market Idx Inv||VEXMX||Mid-Cap Blend||2.9%|
|Fidelity® Low-Priced Stock||FLPSX||Mid-Cap Value||4.1%|
|Fidelity® Growth Company||FDGRX||Large Growth||8.2%|
|Vanguard Instl Ttl Stk Mkt Idx InstlPls||VITPX||Large Blend||2.6%|
|Vanguard Value Index Inv||VIVAX||Large Value||0.2%|
|American Funds American Mutual A||AMRMX||Large Value||-0.2%|
|MFS® Value A||MEIAX||Large Value||2.1%|
|Fidelity Spartan® Total Market Idx Inv||FSTMX||Large Blend||2.6%|
So far this year, the Standard and Poor’s 500 stock index has gained 2.5%, including reinvested dividends. The 25 largest funds have gained 3.3%.
A few observations:
Growth funds have beaten value — not just this year, incidentally, but the past five. The standout in this particular table is T. Rowe Price Growth stock, a $47 billion giant that has beaten the S&P 500 for a decade and ranks in the 15th percentile or above in its category during the entire period. Its largest holdings: Amazon, Priceline and Visa, accounting for about 10% of the fund’s assets. The one drawback to the fund: Current manager Joe Fath has been at the helm for about a year and a half. (He’s been with T. Rowe since 2002.)
Value funds have been laggards. You shouldn’t be surprised by this: It’s the sixth year of a bull market and few stocks are cheap, relative to earnings. Few of the big value funds have significant cash on the sidelines: They’re paid to be fully invested, so one has to presume that managers are holding their noses and buying the cheapest stocks they can find in an expensive market.
The one exception is Fidelity Low-Priced stock, which has a cash stash of about 9%. The fund is arguably the most eclectic and diverse of the group, with 52% of its assets in U.S. stocks and 39% abroad.
By and large, you don’t have much choice when it comes to the funds in your work-sponsored retirement plan. And in most cases, you’ll get big funds with a good track record — not the best way to choose funds, but again, you don’t have much choice. But remember this: Unless you’re on the verge or retirement, it’s probably better to get the right amount of your savings in a mediocre stock fund than it is to have too much in cash or bonds.