The ‘Magnificent Seven’ tech stocks helped drive a rebound at many large-cap funds after a dismal 2022. The winner surged 65.2%. Bulls reclaimed the upper hand in 2023, with the top 12 fund managers in our Winners’ Circle scoring one-year gains above 50%. ALEX NABAUM By Lawrence Strauss Jan. 7, 2024 8:00 am ET 23 Large-cap companies led the way in 2023, benefiting the money managers who believed in them. Driven by a rebound in large and megacap stocks, in particular the “Magnificent Seven” technology companies, mutual-fund managers who saw double-digit losses in the market rout in 2022 found themselves rewarded for their patience this past year. Nine of the top 10 stock funds in The Wall Street Journal’s Winners’ Circle survey of mutual funds, which covers the 12-month period ended Dec. 31, are in Morningstar ’s large-cap growth category—often with big weightings in outperforming sectors such as technology, communications services and consumer discretionary. Those S&P 500 sectors notched total returns, including dividends, of 57.8%, 55.8% 42.4%, respectively, easily topping the broader market’s 26.3% result. Still, the Magnificent Seven paced the market. These stocks— Alphabet , Amazon.com , Apple , Meta Platforms , Microsoft , Nvidia and Tesla —all gained more than 48% last year. Nvidia, whose chips have become synonymous with exploding interest in artificial intelligence, was the biggest winner among those stocks with a gain of 239%. It was followed by Facebook parent Meta at 194% and Tesla at 102%. These were popular holdings among the top-performing funds in the latest survey, though it varied by the individual manager. Excluding those stocks, the S&P 500’s return was only 9.9%, according to S&P Dow Jones Indices. In other words, the Magnificent Seven accounted for more than half of the index’s 2023 performance and boosted the returns of many funds as well. Still, there was plenty of good performance across mutual funds, and it wasn’t always contingent on those seven stocks. A rising tide lifts most boats. Survey parameters For the latest 12-month period, more than 1,000 of the 1,191 funds tracked in the Journal’s survey made double-digit gains. The average fund returned 19.7%, and only four funds registered declines. WINNERS’ CIRCLE Best 12-month total return through Dec. 31, 2023, actively managed U.S.-stock funds 1. Virtus Zevenbergen Innovative Growth (SAGAX) 65.2% 2. Value Line Larger Companies Focused (VALLX) 59.1% 3. Baron Fifth Avenue Growth (BFTHX) 57.2% 4. Fidelity Blue Chip Growth K6 (FBCGX) 55.6% 5. Morgan Stanley Inception Portfolio (MSSGX) 54.4% 6. Harbor Capital Appreciation (HACAX) 53.7% 7. John Hancock Funds II Capital Appreciation (JHCPX) 53.2% 8. Morgan Stanley Insight (CPODX) 53.0% 9. BlackRock Large Cap Focus Growth (MAFOX) 52.7% 10. PGIM Jennison Growth (PJFAX) 52.7% The Wall Street Journal, from Morningstar Direct data To qualify for inclusion in the Winners’ Circle, funds must be actively managed U.S.-stock funds with more than $50 million in assets and a record of three years or more, as well as meet a handful of other criteria. The survey excludes index and sector funds, funds that employ leverage strategies and most quantitative funds. The results are calculated by Morningstar Direct. As always, this quarterly competition isn’t designed to create a “buy list” of funds for readers, but to demonstrate the ways that specific investment strategies benefited from recent market trends. Some of the funds that were highlighted a year ago have fallen in the rankings just as growth portfolios have grabbed the limelight—and that phenomenon isn’t uncommon. Moreover, not all funds cited in these quarterly surveys may be available to investors, and they may have elements that make them unsuitable for some investors, ranging from their fee structure to their longer-term performance or volatility. https://www.wsj.com/finance/investing/best-stock-funds-of-2023-90d12279
Law of large numbers on the mag 7 will start working against them... The amount of earnings power they need to sustain such returns has to be insanely perfect. They did it again today by upgrading Facebook when the stock was already up 30% in 2 months!
Shocking, how few funds can do that [not in percent, but place in 1-10] , even in a ten year period. Plenty of good trend moves are not much related to earnings, AMZN +[ BA] both . Not a stock tip. AMZN disclosed early, near IPO, was not going to max earnings, but build. Good read + good job.