The Top 11 Performers of 2014

As we wrap up our coverage of 2014, I thought I'd take a look at the Morningstar 500 funds that produced top-percentile performance. (The Morningstar 500 is the investment list for FundInvestor.) Just as last year, 11 funds pulled it off.

Let's look at this list from top absolute return on down. Remember my usual caveat that short-term performance isn't a great predictor of future performance and buying funds after a great year is usually not a good strategy.

1. Meridian Small Cap Growth

MISGX

20.3%

Janus veterans Chad Meade and Brian Schaub took this tiny fund over at the end of 2013, and boy did they hit the ground running. They overhauled the portfolio and quickly reaped rewards. Although some of their names didn't work out, they had big hits with companies like Cimpress CMPR, Rentrak RENT, and SolarWinds SWI. I wouldn't read much into one year, but they also produced great results over many years at

2. Vanguard Primecap Core

VPCCX

19.29%

3. Vanguard Capital Opportunity

VHCOX

18.88%

4. Vanguard Primecap

VPMCX

18.72%

It's easy enough to spot the theme here. All three are run by Primecap, the growth specialists from Pasadena, California. Primecap was set up in the 1970s by former American Funds managers, and they've done a great job applying American's deep fundamental research process to growth investing. They've also succeeded in building a similar team-managed, career-analyst firm in the style of American. Add that to Vanguard's low expenses and you have one heck of a good combination. (I own Vanguard Primecap Core, Vanguard Capital Opportunity, and

Primecap tends to buy growth stocks when they've fallen a bit, but it's willing to let them ride. That's how these funds came to accumulate a lot of biotech names and participate in their big runs the past couple years. Names like

5. Vanguard Long-Term Treasury Investment-Grade

VWESX

18.17%

It's a pretty simple story here. The long end of the yield curve had a big rally, making funds like this one of the year's big winners. It boasts a duration of 12.9 years, meaning it largely rises and falls with the long end of the curve. Wellington runs 90% of assets, and Vanguard's in-house bond team runs the rest.

6. PIMCO Foreign Bond (USD-Hedged)

PFODX

16.9%

Some foreign bond markets actually had decent years, only you lost it all to currency unless you were hedged back to the dollar. Remember all the doom and gloom about the dollar a couple years ago? Well,

7. Primecap Odyssey Aggressive Growth

POAGX

16.55%

This is the most distinctive of the Primecap funds. It has a small/mid-cap tilt, which explains why its absolute returns lagged those listed above, as small caps were the weakest spot in the market. That said, it, too, rode biotech and tech to great gains.

8. FPA Perennial

FPPFX

16.38%

When FPA moved its funds to no-load a couple years ago, investors overlooked this solid mid-growth fund. Although Steve Geist retired in 2014, it remains in good hands with longtime comanager Eric Ende in place, as well as recently promoted Greg Herr. This isn't your typical mid-growth fund: It isn't a momentum fund, and it doesn't own a ton of tech. Its path to great results in 2014 came from duller retailers like

9. Vanguard GNMA

VFIIX

6.65%

Wellington's Michael Garrett merited a nomination for Morningstar Fixed-Income Manager of the Year thanks to his excellent job leading this fund in 2014. Yes, Vanguard's low costs help, but that doesn't get you to top percentile without strong management to boot. You can read more in our article about the nominees

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10. Fidelity Capital & Income

FAGIX

6.13%

Mark Notkin has made hay while the sun shines. In a year when junk bonds were flat, Notkin held a slug of equities and that made all the difference for the fund. Investors who held on through the bad years have been rewarded with top-decile 10-year returns.

11. Tweedy, Browne Global Value

TBGVX

1.51%

Like PIMCO Foreign Bond (USD-hedged), this fund's currency hedging is crucial to its success story in 2014. Without it, the fund would have been in the red but would still have outperformed its peers. Management's strategy has been heavily influenced by Warren Buffett. They want great businesses at fair prices and they hold on for the long haul. They don't run as focused a portfolio as Buffett, though.