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The Market's 10 Best Funds … Revealed

A record $883 billion was added to mutual funds during 2007, and you were likely one of the contributors. If that's the case, and you added a single dime to funds in your 401(k), IRA, or taxable accounts, you must keep reading.

But first, some history …
Two summers ago, we decided to take stock of the 10 best-performing U.S. mutual funds. With thousands of funds vying for your dollars, and with the Great American Retirement Shift, where self-directed, fund-holding 401(k)s are becoming the best hope workers have for retirement, we hoped that looking at the cream of the crop would be instructive.

Was it ever!

Two very powerful conclusions emerged. The best mutual funds of the past decade:

  • Charged lower-than-average expenses.
  • Had longer-tenured managers.

Today's experiment
Those results make perfect intuitive sense. (Of course the smartest investors, charging the lowest fees, will net you the biggest returns!) But with the market environment today drastically different from what it was two years ago, we figured now was a good time to rerun the numbers and confirm (or deny) or conclusion.

Without further ado [insert drumroll here], the 10 best-performing mutual funds of the past 10 years are:



10-Year Return*

Recent Holdings

ING Russia



Lukoil, Gazprom

Vanguard Precious Metals & Mining**



Eramet, Lonmin

CGM Focus



U.S.Steel (NYSE: X  ) , Nucor (NYSE: NUE  ) , America Movil (NYSE: AMX  )

Jennison Natural Resources



Southwestern Energy, Suncor Energy (NYSE: SU  ) , Halliburton (NYSE: HAL  )

BlackRock Global Resources



Consol Energy, Massey Energy

Matthews Korea



Samsung, NHN, Shinhan Financial

USAA Precious Metals & Minerals



Goldcorp, Agnico-Eagle Mines

Turner Emerging Growth**



Bucyrus International, Deckers Outdoor

U.S.Global Investors Global Resources



Occidental Petroleum (NYSE: OXY  ) , Potash (NYSE: POT  )

U.S.Global Accolade Eastern Europe



Gazprom, Lukoil

*Annualized. Data from Morningstar as of July 28, 2008.
**Closed to new investors.

This table does tell a different story than the one two years ago. Two years ago, small-cap funds were the outperformers. Today, thanks to enormous and growing demand for commodities, resources funds look like the place to have been.

But while the investment niche changed on us, the underlying traits of the top fund managers and their fee structures remained remarkably the same.

The foundation of greatness
Here's what we found when we compared the top funds with their peers:


Equity Fund Average

Top 10 Funds by Performance

Manager Tenure

3.9 years*

10.6 years

Expense Ratio



*Domestic U.S. funds, according to Morningstar.
**Simple average stock fund expense ratio. Data from the Investment Company Institute.

The best funds of the past 10 years still had, on average, longer-tenured managers and charged less to manage your money. Those two facts are so important that they bear repeating: The best mutual funds of the past 10 years had long-tenured managers who charged less to earn you more money.

Even better, seven of the 10 best mutual funds of the past decade did not charge loads -- the onerous up-front sales fees that some funds try to get away with charging.

For all 90 million of you ...
So, if you're looking to invest in one of the best mutual funds of the next 10 years, you know where to start: with long-tenured managers who don't charge you an arm and a leg to invest.

Not coincidentally, that's the drum our team at Motley Fool Champion Funds has been beating for years, and with great success. Low fees and veteran managers are some of the very first characteristics we screen for in prospective funds, and Champion Funds has found success with that formula: Recommended funds are beating the market by double digits.

If you'd like to see our entire list of recommended funds, click here to join the service free for 30 days. One of the next decade's best performers just might be lurking therein.

Neither Tim Hanson nor Brian Richards owns shares of any company mentioned. CGM Focus is a Motley Fool Champion Funds recommendation. The Fool's disclosure policy never underperforms.

Read/Post Comments (3) | Recommend This Article (35)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 29, 2008, at 5:56 PM, dsegrest1 wrote:

    Most of these funds I have been tracking and was so impressed with their returns, but always felt they might be too high to buy into because of their impressive gains (plus my husband doesn't like mutual funds-what's to not like?) Do you think they are sound investments for maybe the end of 2008?

  • Report this Comment On August 02, 2008, at 3:31 PM, natcpm wrote:

    This column is worthless. Most of the funds listed are specialized or sector funds, subject to extreme highs or lows. Listing diversified funds with some analysis would have made a more useful read.

  • Report this Comment On August 26, 2008, at 12:07 AM, ronna017 wrote:

    Now that Eurox has split 3 for 1 its

    price has dropped to 12.83. over 25%

    decline. Is this a sell now? It is being

    reorganized in Sept. what will that do?

    I'm worried.

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