How the Largest Stock Funds Did in Q2 2025
A pair of American Funds strategies led active stock fund returns in the quarter.
This article mentions funds that have an issuer-initiated rating and/or track a Morningstar Index. For full disclosure information, please refer to the specific funds, which are demarcated with a * symbol, listed below.
Key Takeaways
- The stock market roared back to life after a poor showing in the first quarter.
- American Funds Fundamental Investors Fund and American Funds Investment Company of America landed in the top 10% of their categories.
- The Vanguard Mid Cap Index Fund topped the list of index funds, while the Vanguard Value ETF underperformed its category.
The largest stock index funds posted generally solid performances compared with their peers in the second quarter, while the largest actively managed funds saw a more mixed performance, with higher highs but lower lows.
Of the 10 largest active stock funds, three ranked in the top fifth of their categories, with two in the top decile, including the $152 billion American Funds Fundamental Investors Fund RFNGX, which ranked in 4th percentile of the large-cap blend category with a 15.5% return. Half of the largest active stock funds underperformed their categories for the quarter, with the $200 billion American Funds Washing Mutual Investors Fund RWMGX bringing up the rear with in the 73rd percentile of large blend funds.
Nine of the biggest stock index funds outperformed their categories this quarter, though none ranked in the top quarter of their categories. The best of the group was the $186 billion Vanguard Mid Cap Index Fund
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The one index fund among the most widely held strategies to underperform its category was the $185 billion Vanguard Value Index Fund
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In terms of absolute returns, all of the funds on the list posted gains. The largest, the $1.8 trillion dollar Vanguard Total Stock Market Index Fund
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The Largest Active Stock Funds: The Best Q2 Performers
Each quarter, we review the short- and long-term performance of the largest active stock funds and index-tracking funds. Names like the Vanguard Total Stock Market Index Fund, are core holdings in many investor portfolios, especially retirement accounts. This list includes both traditional mutual funds and exchange-traded funds.
Performance data for this article was based on the lowest-cost share class for each fund. Some funds may be listed with share classes not accessible to individual investors outside retirement plans. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. For longer-term returns, if a share class was launched more recently than the period mentioned, an older share class was substituted if one exists.
The best performer was the American Funds Fundamental Investors Fund. The Silver-rated ranked in the 4th percentile of the large-cap blend category based on a 15.5% return. “Capital Group’s multimanager approach lets the managers play to their strengths,” writes Morningstar senior analyst Stephen Welch. “With distinct styles, they can invest in their best ideas or hold cash to wait for compelling opportunities. Meanwhile, the combination of separately managed sleeves mutes the overall portfolio’s volatility.”
The $165 billion American Funds Investment Company of America Fund RICGX also ranked in the top decile of the large-cap blend category. The Silver-rated fund placed in the 7th percentile with a 14.3% return. “The strategy’s leadership changed hands in 2020, and the leaders sought to steer it back to its growth of capital and income mandate by opening up the eligibility list and lowering the yield requirement,” says Welch. “Results have been more impressive since then, as the strategy’s returns have outperformed the index and the large-blend category average.”
In terms of absolute performance, the Bronze-rated $321 billion American Funds Growth Fund of America RGAGX, topped the list with an 18.1% return, placing it in the 40th percentile of the large-cap growth category. It’s a testament to how much growth strategies came roaring back in the second quarter.
“This capital appreciation strategy looks to offer broad diversification which can make it hard to place,” writes Welch. “All three of the firm’s equity subsidiaries contribute, divvying up allocations into smaller, independent sleeves under its characteristic multimanager approach. The managers look to diversify across sectors and companies, and can invest in overseas companies that derive notable revenue from the US.”
The Largest Active Stock Funds: The Worst Q2 Performers
While there were some star performers among the largest active funds in the second quarter, about half underperformed their categories. The worst in terms of category ranking was the Gold-rated American Funds Washington Mutual Investors Fund, which ranked in the 73rd percentile of the large blend category with an 8.8% return. “This strategy’s focus on dividends has led to a fairly conservative portfolio that has served risk-averse investors well,” writes Welch.
The laggard in terms of absolute return was the Gold-rated Dodge & Cox Stock Fund DOXGX. The $114 billion strategy returned 3.9% for the quarter, putting it in the 51st percentile of the large value category. “The strategy’s returns are typically quite lumpy over short periods, but the managers’ calm conviction and the analysts’ vigilance often turn that volatility to investors’ advantage over time,” writes Morningstar associate director Tony Thomas. “The strategy has an impressive long-term record.”
The Largest Stock Index Funds: The Best Q2 Performers
Index funds tend to follow the broader market, or whatever segment of the market that the index a fund tracks is trying to capture. In the second quarter, stocks came back after first-quarter losses. The S&P 500 closed out the quarter at a record high as AI stocks bounced back and President Donald Trump backed away from the most extreme of his tariffs.
In the quarter, the Vanguard Mid Cap Index Fund ranked the highest in its category. The Gold-rated fund’s 8.7% return placed it in the 26th percentile of the mid-cap blend category. “Vanguard Mid-Cap Index effectively combines a broadly diversified portfolio of US mid-cap stocks with low turnover and a minuscule price, providing it with a durable edge over its mid-cap blend Morningstar Category peers,” writes Morningstar senior analyst Daniel Sotiroff.
The fund with the highest total return overall was the $294 billion Vanguard Growth Fund
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Long-Term Performance of the Largest Active Stock Funds
Short-term performance can show how funds hold up under certain market conditions, but the best way to take a fund’s measure is to look at its longer-term performance relative to its peers or benchmarks.
The largest actively managed stock funds have mostly done well over the past three years, with only two underperforming their category averages, while three ranked in the top decile.
The highest-ranking fund in its category was the American Funds Investment Company of America Fund, which ranked in the 3rd percentile of the large-cap blend category with a 23.5% annualized return.
The American Funds Fundamental Investors Fund also outperformed during this period, with its 22.4% annualized return over the past three years placing it in the 5th percentile of the large-cap blend category.
The worst performer relative to its category over the past three years is the Neutral-rated $93 billion American Funds AMCAP Fund RAFGX, which ranked in the 76th percentile of the large-growth category with a 20.5% annualized return. “American Funds’ long record of eventually finding the right talent mix for each strategy bodes well, but this team needs to stabilize and prove it can execute,” writes Welch.
The Long-Term Performance of the Largest Stock Index Funds
The three-year trailing performance of the largest index funds is uniformly good, with all 10 outperforming their categories over that period, with five in the top quarter of their categories.
The Vanguard Value Index Fund pulled up the rear, ranking in the 44th percentile of the large value category with a 13.1% annualized return over the past three years.
The best performance is four-way tie between four Gold-rated funds, thanks to their tracking of the S&P 500 Index: the $1.4 trillion Vanguard 500 Index Fund VFFSX, the $666 billion Fidelity 500 Index Fund FXAIX, the $623 billion iShares Core S&P 500 ETF IVV, and the $308 billion Vanguard Institutional Index Fund VIIIX. The four funds have annualized returns of 19.7% over the past three years, putting them all in the 22nd percentile of the large-cap blend category. The funds are “best-in-class option[s] for large-cap investors,” writes Morningstar associate analyst Brendan McCann.
The author or authors own shares in one or more securities mentioned in this article. Find out about Morningstar’s editorial policies.
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