These 15 Funds Have Created the Most Wealth for Investors: Morningstar

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The behemoths in the fund industry often get knocked because they are said to have too much power and fail to act in shareholders’ best interests.

But research by Amy Arnott, a portfolio strategist for Morningstar Research Services, found that the biggest funds and fund families have created significant value where it counts: by increasing dollar value for shareholders.

In a blog post this week, Arnott ranked U.S.-based mutual funds and ETFs in Morningstar’s database, focusing on those that had experienced the biggest increase in asset size over the 10-year period, ending in December 2021, after subtracting total inflows and outflows over that period.

The resulting number reflected how much growth a fund created from market appreciation in dollars.

Arnott acknowledged that the biggest funds will create or destroy more value in dollar terms. And as money tends to flow to the funds that have been successful in the past, the big generally get bigger.

And indeed, the 15 funds she found to have created the most wealth are all large, well-established names, and all but three are also among the biggest funds in the industry as ranked by asset size.

Eight of the 15 funds are low-cost, passively managed funds that track broad market indexes. “Because few active managers have been able to consistently add value, buying the market and keeping costs low has been a winning strategy,” she said.

Morningstar Category Results

When Arnott examined the results by Morningstar category, she found that basic was definitely better. The large-blend category, which ranked as the single largest fund category based on assets as of Dec. 31, tops the list with an estimated $4.4 trillion in shareholder value created. Eight of her 15 top funds reside in this category.

Bond funds, however, are absent, despite posting respectable returns over the trailing 10-year period ending in 2021.

“Even though bond-fund returns got a boost from steadily declining interest rates over most of the period, asset growth from market appreciation has been less robust than on the equity side,” Arnott wrote.

Five funds on Arnott’s list land on the growth side of the Morningstar Style Box.

Arnott found that technology-stock funds created some $245 billion over the 10-year period, better than might be expected. Over the 10 years from 2012 through 2021, tech stocks were far and away the best-performing sector, with annualized returns beating the broader market by about four percentage points per year.

“This performance advantage means shareholders were well rewarded, even though sector funds tend to be difficult to use effectively in a portfolio,” she said.

See the gallery for the 15 funds that created the most wealth for the trailing 10 years through 2021, according to Morningstar.

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