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Fund Spy

The Year in U.S. Equity Funds: Growth Was King in 2017

David Kathman, CFA, Ph.D.

U.S. stocks continued their relentless march upward in 2017, extending one of the longest bull markets in history. (Only the 1990s bull market lasted longer.) The year began with a lot of market optimism due to the business-friendly agenda of the incoming Donald Trump administration, and even though dysfunction in Washington ended up tempering many of those expectations, the economy continued to hum along and corporate earnings were generally solid. The S&P 500 gained 22% for the year to date through December 23, and the tech-heavy NASDAQ Composite Index returned 31%.

In general, growth funds performed better than value funds in 2017, and large-caps outpaced small-caps. Among the nine Morningstar Style Box categories, large-growth funds posted the highest average gains (28%), and small-value funds had the lowest (9%). This pattern was driven by the strong stock performance of big tech names such as  Apple (AAPL),  Amazon.com (AMZN), and  Facebook (FB), each of which gained more than 50% for the year. The same trend drove the impressive gains of technology sector funds, which were up almost 40% on average.

David Kathman, CFA, Ph.D. does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.