Best-Performing Mutual Funds: October 2020

These are the best U.S. equity funds based on 2020 YTD total returns.

Kevin Voigt, Chris DavisOctober 15, 2020
Best Mutual Funds of May 2019

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When shopping for mutual funds, we naturally are curious: Which ones are performing the best today?

While that’s a common place to begin your search, remember you’re shopping for tomorrow when looking for the best mutual funds. Top performers in the short term don’t always become long-term winners. The best mutual funds for your portfolio won’t necessarily be the best for your parents, your siblings or your neighbors.

To determine the best mutual funds measured by year-to-date returns, we looked at U.S. equity funds open to new investors with low costs (no sales commissions, and expense ratios of 1% or less) and minimum investments of $2,500 or less. For more on how to choose a mutual fund, skip ahead to this section.

Best performing U.S. equity mutual funds as of October 2020

Symbol

Fund

Fund performance (YTD return)

Expense ratio

DFDIX

Delaware Smid Cap Growth Institutional

69.36%

0.85%

LGLFX

Lord Abbett Growth Leaders F

61.78%

0.68%

ACFOX

American Century Focused Dynamic Growth Investor Class

60.09%

0.85%

AAGOX

Alger Large Cap Growth I-2

51.48%

0.89%

FZAHX

Fidelity Advisor Growth Opps Z

51.3%

0.72%

PSGQX

PGIM Jennison Focused Growth R6

50.32%

0.67%

DBMYX

BNY Mellon Sm/Md Cp Gr Y

49.86%

0.64%

HGOVX

Hartford Growth Opportunities R6

49.48%

0.76%

LADVX

Lord Abbett Developing Growth R6

49.05%

0.6%

JLGRX

JPMorgan Large Cap Growth R5

47.18%

0.54%

Data current as of Oct. 15, 2020.

How to choose the best mutual funds for you

NerdWallet’s recommendation is to invest primarily through mutual funds, especially index funds, which passively track a market index such as the S&P 500. The mutual funds above are actively managed, which means they try to beat stock market performance — a strategy that often fails.

When you're ready to invest in funds, here's what to consider:

  • Decide whether to invest in active or passive funds, knowing that both performance and costs often favor passive investing.

  • Understand and scrutinize fees. A broker that offers no-transaction-fee mutual funds can help cut costs.

  • Build and manage your portfolio, checking in on and rebalancing your mix of assets once a year.

Below are some of our picks for the best providers for mutual funds and index funds:

You Invest by J.P.Morgan
NerdWallet rating 
Read review

Fees and minimums:

  • $0 trade fees. $0 annual or inactivity fees.

  • No account minimum.

Promotion:

  • Up to $725 cash bonus when you open and fund a new account with $25,000 or more in new money.

Vanguard Personal Advisor Services
NerdWallet rating 

on Vanguard's website

Fees and minimums:

  • 0.30% per year.

  • $50,000 account minimum.

Promotion:

  • None.

Ellevest
NerdWallet rating 

on Ellevest's website

Fees and minimums:

  • $1 - $9 per month.

  • No account minimum.

Promotion:

  • Two months free with promo code "nerdwallet"

» Want to see more options for fund investing? See the full list of brokers

Average mutual fund return

Managing your portfolio also means managing your expectations, and different types of mutual funds should bring different expectations for returns.

Stock mutual funds = higher potential returns (or losses)

Stock mutual funds, also known as equity mutual funds, carry the highest potential rewards, but also higher inherent risks — and different categories of stock mutual funds carry different risks.

For example, the performance of large-cap high-growth funds is typically more volatile than, say, stock index funds that seek only to match the returns of a benchmark index like the S&P 500, which has grown an average of 6.6% a year over the past 30 years. (Learn more about stock mutual funds versus index funds.)

Over the past five years, the average equity mutual fund return ranged by category from minus-2.23% for Latin America stock funds to 10.53% for large-cap growth stocks, according to Aug. 28 data from Morningstar.

Bond mutual funds = lower returns (but lower risk)

Bond mutual funds, as the name suggests, invests in a range of bonds and provide a more stable rate of return than stock funds. As a result, potential average returns are lower.

Bond investors buy government and corporate debt for a set repayment period and interest rate. While no one can predict future stock market returns, bonds are considered a safer investment as governments and companies typically pay back their debt (unless either goes bust).

Like equity funds, there are a range of bonds with varying degrees of risk. Over the past five years, the average bond mutual fund return ranged by category from minus-0.9% for emerging-markets local-currency bond funds to 6.7% for long-term government bonds, according to Morningstar.

Money market mutual funds = lowest returns, lowest risk

These are fixed-income mutual funds that invest in top-quality, short-term debt. They are considered one of the safest investments you can make. Money market funds are used by investors who want to protect their retirement savings but still earn some interest — somewhere between 1% and 3% a year. (Learn more about money market funds.)

Focus on what matters

Chasing past performance may be a natural instinct, but it often isn't the right one when placing bets on your financial future. Mutual funds are the cornerstone of buy-and-hold and other retirement investment strategies. Hopping from stock to stock based on performance is a rear-view-mirror tactic that rarely leads to big profits. That's especially true with mutual funds, where each transaction may bring costs that erode any long-term gains.

What's important to consider is the role any mutual fund you buy will play in your total portfolio. Mutual funds are inherently diversified, as they invest in a collection of companies (rather than buying stock in just one). That diversity helps spread your risk.

You can create a smart, diversified portfolio with just a few well-chosen mutual funds or exchange-traded funds, plus annual check-ins to fine-tune your investment mix.

View Morningstar's expert fund picks

With a 14-day free trial* of Morningstar Premium, you'll get access to independent analysis and ratings of thousands of mutual funds and ETFs.

*Paid subscription thereafter, see Morningstar.com for details.

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