How to Find Top-Performing Stocks and Under-the-Radar Funds Like Our Analysts

With so many new funds hitting the market, it’s tough to know where to focus—or which strategies actually have long-term potential. Morningstar Manager Research analysts curate the Morningstar Prospects List, a biannual collection of promising but under-the-radar fund strategies. Drawing on quantitative analysis and qualitative data, we identify these strategies early, offering insights that help investors get ahead of the curve.

Whether you’re looking for small-cap funds, unique processes, or funds propelled by experienced managers, the key is a systematic approach to finding opportunities. 

Here are five proven methods our analysts use to find under-the-radar funds and strategies so you can do the same. 

Regulatory filings are a gold mine for investors seeking new, lesser-known opportunities. By carefully analyzing documents like SEC filings, registration statements, and prospectuses, you can uncover new funds or identify changes in strategies that may provide unique growth opportunities. 

For example, filings often contain information about: 

• New fund launches: Funds that have hit the market within the past year, offering innovative strategies or untapped markets. 

• Strategy changes: These shifts could signal a significant transformation, such as a shift to a higher-conviction or more focused approach. 

• Portfolio manager insights: Regulatory documents often reveal detailed information about fund managers, such as their objectives, investment philosophy, and previous performance. 

The Tremblant Global ETF TOGA, highlighted in the Morningstar US Prospect list, launched on April 30, 2024. This fund leverages a distinctive blend of global equities with a focused sector selection designed to capitalize on long-term growth trends.  

Use resources like Morningstar Direct or the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) to review filings regularly. Pay particular attention to prospectuses for information about fund strategy, objectives, and manager credentials. 

See all 39 prospects from the Morningstar US Prospects report. 

When a seasoned portfolio manager launches or takes over a new fund, particularly those with a proven track record managing other strategies, it can signal an investment opportunity with significant upside potential. 

Experienced managers may bring: 

• A history of success: A track record of outperforming benchmarks or delivering consistent returns. 

• Credibility across market cycles: Managers who have navigated various market conditions demonstrate commitment to their strategies, even when they’re unpopular. 

• Category expertise: Specific areas where managers have deep knowledge, such as small-cap strategies, growth equities, or sector-specific investments. 

The Amundi Funds European Equity fund, listed in the Morningstar EMEA & Asia Prospects report, is a compelling case. It is now led by an experienced team with a proven ability to uncover high-quality companies at attractive valuations. Despite being new to the specific fund, the management team’s long track record with similar strategies positioned the fund as an emerging leader in its space.  

Use Morningstar Direct to view People Pillar ratings to assess management quality and manager tenure history. Screen for managers with significant tenure across other funds within the Workspace module. Look at their performance history, how they’ve handled volatility, and their investment expertise.  

See all prospects from EMEA and Asia in the report. 

Sometimes, an underperforming fund can become a hidden gem following a pivotal shift in management or strategy. Many investors dismiss these funds due to poor past performance without considering the potential for transformation. 

Key questions to ask: 

• Has there been a recent management change? New leadership can bring fresh ideas and refined methodologies. 

• What changes have been made to the strategy? A high-conviction or more focused approach could signal upside potential. 

• Does the fund align with your objectives? Ensure the altered strategy aligns with your risk tolerance and style preference.

One standout example from the Morningstar US Prospects is the Fidelity Fund, which has recently undergone significant transformation under new management. Nidhi Gupta, a seasoned and highly regarded portfolio manager, took the helm in late 2024, bringing a wealth of experience and a proven track record of generating strong returns in similar strategies.

This leadership change has been accompanied by a refined high-conviction investment approach, emphasizing growth opportunities within underappreciated sectors.  

With these adjustments, the Fidelity Fund has positioned itself as a compelling option for investors seeking long-term capital appreciation while maintaining alignment with moderate risk profiles. Its inclusion in the Morningstar Prospects highlights the potential for an impactful turnaround, making it a fund worth watching in the coming years. 

Evaluate funds that have undergone leadership changes, particularly those with managers known for strong track records and a clear investment approach. Reviewing post-transition performance metrics and sector exposures can provide additional insights into the fund’s future potential. 

To effectively screen for new fund strategies within Morningstar Direct, focus on comparing these new strategies to similar past investments managed by the same individual in a performance report.

This approach allows you to assess the manager's experience and track record with comparable investment styles. By examining how they performed in previous roles using similar strategies, you can gain valuable insights into their potential success with the new fund. 

Many smaller or newer funds employ unconventional strategies that don’t fit into traditional frameworks, making them harder to screen via conventional methods. While funds with over $500 million in assets are less likely to close or merge, smaller funds can offer advantages such as more concentrated stock-picking approaches.  

These funds often feature: 

• Distinctive investment processes: These include thematic investing or geographic concentration. 

• Focused portfolios: With fewer holdings, allowing managers to take high-conviction bets. 

• Small asset bases: Offering nimbleness to capitalize on niche opportunities without affecting stock prices.

Funds like the Polar Capital Artificial Intelligence strategy, highlighted in the Ideas on Our Radar Asia Edition, have undergone transformation through strategy refinements. Initially overlooked due to its size, this fund has steadily gained attention for its innovative focus on both “AI enablers” (such as chipmakers) and “AI beneficiaries” in unexpected sectors like healthcare and retail.

With an evolving process led by manager Xuesong Zhao since its inception in 2017, the fund is poised to capture long-term growth. 

See all prospects from Ideas on Our Radar Asia Edition: Q1 2025 

Lastly, smaller funds with long track records but relatively low assets under management can offer hidden opportunities ignored by large institutional investors but present compelling investment opportunities for those willing to look beyond mainstream options. 

Advantages include: 

• Stability: A proven track record reduces the risk of significant performance drawdowns. 

• Lower attention: Funds with smaller AUM often face less scrutiny from large institutions, meaning you could find other opportunities where others miss out.

Take the Beutel Goodman Small Cap Fund from the Canada Prospects List as an example. This fund has demonstrated strong performance but remains relatively undiscovered by mainstream investors.

This Canadian small-cap equity fund is managed by a team emphasizing intrinsic value, focusing on companies trading below their true worth. Its disciplined approach has delivered robust gains in a category often associated with volatility. 

Don’t dismiss funds based on smaller asset bases or short track records. Instead, dig into their processes and determine how they differentiate from their peers. 

• Assess key performance metrics such as sharpe ratio and rolling returns. 

• Monitor asset under management growth and investor inflows. 

• Compare historical returns against benchmark indices. 

The art of finding under-the-radar funds is about precision, patience, and proactive research. By leveraging Morningstar’s approach and tools, investors can uncover unique opportunities that are not yet crowded by others.  

Whether through regulatory filings, seasoned managers, strategic overhauls, unique processes, or long-term performance, under-the-radar funds provide an exciting avenue for diversification and growth. 

To go deeper, explore Morningstar’s Prospects and Ideas on Our Radar reports for expert-curated lists of promising fund strategies. Begin your hunt for hidden gems today and position your portfolio for the road ahead.