Meet the Mutual Fund That Created $1 Trillion in Value for Investors — Barrons.com

By Ian Salisbury

The basic job of a mutual fund is to take investors' dollars and turn them into more dollars. The funds that have proved most successful have key things in common — they are large, low cost, and diversified — finds a Morningstar study.

That may come as no surprise to fans of index funds, which tend to be designed with those features in mind. Plenty of active funds, including favorites like Growth Fund of America and Fidelity Contrafund, are also top performers, Morningstar found.

Morningstar examined which funds increased their assets under management the most in the 10 years ended in 2024, while factoring out flows into and out of the funds.

Top of the list was Vanguard Total Stock Market Index fund, which created $1.15 trillion in new dollars for its investors. While many of the top 15 funds on Morningstar's list are index funds, American Fund's The Growth Fund of America was No. 6, generating $265 billion in wealth for fundholders, and Fidelity Contrafund ranked tenth, with $170 billion.

Because Morningstar's study judged value by the cumulative number of dollars created by the funds, it favored funds with large asset bases. Indeed, the $1.81 trillion Vanguard Total Stock Market Index fund is the largest on the market. Still, the list should give investors insights when it comes to picking funds, says author Amy Arnott.

"One of the big takeaways is that simpler has been better," she says. "If you stick with index funds with low expense ratios, those came out well...and even on the active side, the category that performed the best were more mainstream, plain-vanilla strategies like large value and large growth."

Growth Fund of America's " R6" shares, available in certain retirement plans, have returned 13% over the past decade, compared with 12.4% for the average large growth fund. The $284 billion fund owns nearly 300 stocks, giving it an almost index-like breadth. It is run by a team of 12 fund managers.

The $158 billion Contrafund has performed even better, returning 14.3% in the past decade, putting it close to the top 10% of large growth funds. The fund, run for more than 30 years by manager Will Danoff, also has a broad portfolio, with more than 300 stocks — although it is worth noting that Danoff takes some big bets: Meta Platforms, his largest holding, is nearly 18% of the fund, and Berkshire Hathaway, the No. 2 pick, is more than 8%.

Mutual funds don't just create shareholder wealth — they can also destroy it. In a companion study, Morningstar looked at the 15 funds that have lost the most value for shareholders in the past decade (using a slightly different methodology). Notable on that list are a number of exchange-traded funds that use futures contracts to help investors bet against the stock market, such as the ProShares UltraPro Short QQQ ETF, which eroded roughly $10 billion in value, the most of any fund. Also on the list are a pair of funds from ARK Invest, the tech shop run by Cathie Wood: the ARK Innovation ETF and the ARK Genomic Revolution ETF.

Both ProShares and ARK criticized Morningstar's study, saying their specialty funds were trading tools — which investors could use to place bets both for and against the stock market — and shouldn't be judged by how much the fund shares appreciated.

ProShares said its ETFs "performed as designed and as shareholders expected." ARK Chief Operating Officer Tom Staudt said Morningstar's methodology was "apples to oranges" because it ignored ARK funds' usefulness to traders who used them to bet against slices of the stock market.

Write to Ian Salisbury at ian.salisbury@barrons.com

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