The 10 Best Funds of the Past 10 Years, and What We Can and Can't Learn From Them

As a general exercise, I enjoy looking back at top-performing investments to see what we can learn from them to make us better investors. Today, as I've done in years past, I want to share my research on the top-performing mutual funds of the past 10 years.

Why mutual funds? Because nearly all of us owns one in some form -- mostly likely via 401(k) or other retirement plans. In fact, according to the Investment Company Institute, 87 million individuals own a mutual fund.

The following 10 funds had incredible annualized gains, making investors quite a bit of money over the past decade. Unfortunately, there's not a ton we can learn from their success.

But I'm getting ahead of myself. Here are the funds, their returns, and some of their other key data points:

Fund/Ticker

10-Year Annualized Return

Expense Ratio

Morningstar Category Average Expense Ratio

Load?

Manager Tenure

USAA Precious Metals and Minerals (FUND: USAGX  )

28.9%

1.19%

1.41%

None

17 years

Van Eck International Investors Gold (FUND: INIVX  )

28.1%

1.43%

1.41%

5.75%

13 years

U.S. Global Investors World Precious Metals (FUND: UNWPX  )

27.2%

1.81%

1.41%

None

12 years

Tocqueville Gold (FUND: TGLDX  )

27.1%

1.34%

1.41%

None

13 years

ING Russia (FUND: LETRX  )

26.9%

2.11%

1.64%

5.75%

3 years

Wells Fargo Advantage Precious Metals (FUND: EKWBX  )

25.7%

1.80%

1.41%

5.00%

4 years

First Eagle Gold (FUND: SGGDX  )

25.2%

1.22%

1.41%

5.00%

2 years

U.S. Global Investors Gold and Precious Metals (FUND: USERX  )

25.1%

1.54%

1.41%

None

12 years

Oppenheimer Gold & Special Minerals (FUND: OPGSX  )

25%

1.06%

1.41%

5.75%

14 years

OCM Gold Investor (FUND: OCMGX  )

24.7%

1.93%

1.41%

4.50%

23 years

Source: Morningstar. Returns as of March 11, 2011. For manager tenure, I took the tenure of the primary-listed manager from Morningstar.

What's striking about this chart is its uniformity -- of the top 10 performers, nine were investing in gold or precious metals. The lone outlier was Russia-focused: While it's the "R" in BRIC, Russia is not exactly a market you hear much chatter about at cocktail parties.

One obvious conclusion to draw, then, isn't very useful: You should have been in gold 10 years ago. Kidding aside, trying to find the top-performing funds of the next 10 years will be a moving target -- I'll be shocked to see gold and precious metals stacked in the 2021 list. That one sector dominates this list is a reminder of the importance of diversification. (Although if you are looking for an active fund as a way to invest in gold/precious metals, the list above should be useful as a starting point for your due diligence.)

Drilling down
In previous columns on mutual funds, I've argued that investors need to look for funds with:

  • lower-than-average expenses, and
  • higher-than-average manager tenures.

But in the group above, six of the 10 top performers charge load fees, the onerous sales commissions levied against investors as a way of compensating the financial advisors who sell the fund. What's more, six of the 10 also have expense ratios higher than their Morningstar category average.

The management tenure picture is rosier: An impressive seven of the 10 funds have managers who've been at the helm for at least 12 years.

Wrapping up
Nonetheless, that the majority of these funds have high expenses hasn't changed my tune. For the 87 million of us that own funds (and in particular, the subsection owning actively managed funds), investors still need to seek out:

  • lower-than-average expenses, and
  • higher-than-average manager tenures.

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Fool.com managing editor Brian Richards does not own shares of any companies mentioned. The Motley Fool has a disclosure policy. 


Read/Post Comments (4) | Recommend This Article (11)

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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 March 15, 2011, at 12:37 PM, bzhayes wrote:

    Nice article, but not that useful as you noted since the list favors gold due to its recent run up. This seems to be a common problem when looking at average annual returns over a given time frame. I wonder if there is a better statistic to look at. Something that normalizes out huge growths in any single year.

    When exploring the abilities of fund management it would be useful to normalize against the corresponding market. Normalize those gold funds against gold in general and see how those managers match-up compared to others.

  • Report this Comment On March 15, 2011, at 12:44 PM, Foolheart957 wrote:

    Which of these funds have are no load and with lower expenses? In other words, on this roster of ten which are the 3 or 4 best ones (no load and lower expenses, tenured management)? Thank You!

  • Report this Comment On March 15, 2011, at 3:40 PM, myworld111 wrote:

    If I wanted to invest in gold I would buy GOLD; NOT a mutual fund which invests in GOLD. Easiest way to cut the expensive expense ratios this article talks about.

  • Report this Comment On March 15, 2011, at 4:34 PM, bzhayes wrote:

    @Foolheart957 it is all in the chart. USAGX and TGLDX have no load and an expense ratio below the sector average. Both managers have a long tenure too. But... read the article. These funds made the list because they invested in gold over the last ten years, not because the managers are geniuses (who knows maybe they are too). It is a fools errand to chase returns.

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