Skip to Content
Funds

Focused Funds

Topnotch managers concentrate on their best investment ideas in these highly rated funds.

List of investments
Name
Ticker
Category
Morningstar Analyst Rating
Mid-Cap Growth
Target-Date 2035
Target-Date 2050
Large Growth
Target-Date 2020
Large Blend
Large Growth
Target-Date 2045
Target-Date 2035
Target-Date 2045
Mid-Cap Growth
World Large Stock
Target-Date 2025
Target-Date 2025
Mid-Cap Growth
Large Blend
Mid-Cap Growth
World Large Stock
Target-Date 2050
Target-Date 2050
Target-Date 2035
Large Growth
Large Blend
Target-Date 2020
Large Blend
Large Growth
Mid-Cap Growth
Mid-Cap Growth
Large Growth
Large Growth
Large Growth
World Large Stock
Large Blend
World Allocation
World Large Stock
Large Growth
Large Blend
World Large Stock
Target-Date 2050
Large Growth
Mid-Cap Growth
World Allocation

There’s a lot to be said for diversification, and not all of it is positive. A well-diversified portfolio can blunt losses or lessen the impact of a failure in any one position, but on the flip side, it can also water down a portfolio’s winners (a concept Peter Lynch called “diworsification”). Although such concentrated funds might not make good core holdings for nervous investors because of their frequently above-average volatility, they can still serve as strong supporting players. For instance, they typically do not mirror the broader market, allowing talented fund managers to outperform by overweighting (with conviction) stocks or sectors they like. And if you’re paying for active management, that’s typically something you want to see. For this list, we sought highly rated actively managed funds with compact portfolios (40 names or fewer), and also tossed out those with above-average Morningstar Risk Ratings in the hopes of attaining a smoother ride.

List Criteria

Active Funds

We excluded index funds from this list to target only actively managed mutual funds. Unlike passive funds, which aim to mirror the return of an index, active managers aim to beat a benchmark or achieve another goal (for instance, absolute returns) through investment selection, sector rotation, staying out of the market (by holding cash), or other strategies. Some active managers have broad mandates and can invest almost anywhere, while others are restricted to certain areas of the market. It’s important for investors to understand an active fund’s strategy, as many of the best active funds can be out of step with the market for certain periods.

Focused Funds

The funds in this screen hold 40 or fewer investments in their portfolios, suggesting that management is focusing on its “best ideas.”

Medalist Funds (Gold, Silver, or Bronze)

The Analyst Rating for Funds is based on our fund analysts’ conviction in a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.

Morningstar Risk Rating: Average or Lower

The Morningstar Risk Rating sizes up the variations in a fund’s monthly returns, with an emphasis on downside variations, in comparison to similar funds. In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund.

No-Load Funds

This list includes only no-load funds. “No load” refers to a mutual fund that does not charge a fee (known as a load) for buying or selling its shares; the investor typically buys no-load funds directly from a fund company or through a fund supermarket. Load funds, on the other hand, are sold by an advisor or broker and charge a percentage fee at purchase or sale of the shares, which is meant to be compensation for the planner’s investment-selection advice. (Note: Not all advisors sell load funds. Many are compensated via a flat fee or a percentage of all assets under management.) Whether a fund charges a load or not isn’t a reflection of its underlying quality. Many load funds are also Medalists, and some load funds are available without a load through 401(k) or other retirement plans. But we’re including only no-load funds here, since this list is designed to help investors who are primarily doing their own fund-picking.

Open to New Investment

All the funds on this list are open for new investment. Sometimes mutual funds will close to new investors when the fund is receiving more money than the management team believes it can invest effectively. Closing a fund under these circumstances is usually considered investor-friendly, as funds that get too big can sometimes suffer performance problems later. Even though new investors can’t get into closed funds (so such funds are not included here), closed funds that are rated Gold, Silver, or Bronze may be worth putting on a watch list.

Distinct Portfolios Only

Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. Screening for “distinct portfolios only” removes all but one of these options to avoid having several share classes of the same offering cluttering the list. Morningstar normally designates the oldest share class as the distinct portfolio. In some cases, this share class may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. In those cases, investors may want to consider an “investor” share class of the same fund, though the fund expenses may be higher for those share classes.