As the stock market continues in its ninth year of an impressive bull run, mutual funds have enjoyed stellar gains. In 2017, U.S. diversified stock mutual funds averaged a gain of 18.26%, just off the heels of the S&P 500's (^GSPC) 22% gain last year.
While last year was good for mutual funds, 2018 looks to be even better. According to Bank of America Merrill Lynch analysts, 57% of large cap fund managers are outperforming their benchmarks year-to-date. That's the highest first quarter hit rate since 2009, analysts found.
With mutual funds performing with gusto recently, it's worth looking into what stocks in particular they've invested heavily in. With the stock market on shaky ground this week, these stocks could be wise choices for a retirement investor looking to cushion his or her portfolio with winning names.
After all, if they work for the top mutual funds, shouldn't they work for your retirement account?
Among some of the top-performing mutual funds last year, there was a decidedly tech-heavy skew. The top three holdings in the Schwab S&P 500 Index (SWPPX) - Get Report are Apple Inc. (AAPL) - Get Report making up 3.85% of the portfolio, Microsoft Corp. (MSFT) - Get Report with 3.09% and Amazon.com Inc. (AMZN) - Get Report with 2.48%. In the last five years, that mutual fund has returned 15.6% on an annualized basis, making it the best building-block fund in its group.
When it comes to diversified one-decision funds, the Vanguard Wellington (VWELX) - Get Report is among the best. It returned 10.8% annualized over the last five years. The top holdings in that fund are Microsoft at 2.67%, JPMorgan Chase & Co. (JPM) - Get Report at 2.22% and Intel Corp. (INTC) - Get Report at 2.13%.
A close second in the diversified one-decision group is the Fidelity Balanced (FBALX) - Get Report fund, which has returned 10.7% annualized in the last five years. The top holdings in that fund are popular: Microsoft at 2.1% and Amazon at 1.91%.
For custom funds, one of the best is the big-time T. Rowe Price Blue Chip Growth (TRBCX) - Get Report fund, which has returned 18.9% annualized in the last five years. There's more of the same for this top performer, as its biggest holdings are Amazon at a massive 10.12% of the portfolio, Facebook Inc. (FB) - Get Report at 4.53% and Microsoft at 4.28%.
Bottom line? There's nothing wrong with some tech exposure in this market. While stocks in that space have struggled some of late, they remain likely long-term winners. Remember, the Technology Select Sector SPDR ETF (XLK) - Get Report has rallied 22.6% in the last 12 months.
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