These Funds Went From First to First

Russel Kinnel: Markets and the economy are cyclical. The economy is a reinforcing cycle as growth inspires more investment growth, but eventually it overdoes it and suffers a shock, and then it becomes a reinforcing cycle to the downside as job cuts and cost cuts spur more job cuts and cost cuts. Likewise, markets tend to get excited about a growth area like GLP-1s, covid vaccines, energy, or AI until it gets carried away and then reverses course as supply drives down prices.

That’s why in mutual funds we often see last year’s laggards surge to the lead the next year, while last year’s winners slump. Recently, I looked for some examples of worst-to-first to make that point, and I couldn’t find any. That brings us to another factor:

. Things don’t always quickly reverse. Sometimes a movement has legs. AI and the money raised for more AI keep exceeding expectations, and so stocks have kept on rising. Momentum has long been validated by academics, in fact. A company that beats earnings estimates in one quarter is a good bet to do it the next because we tend to underestimate change.

This year, we have a lot more first-to-first funds than worst-to-first. Let’s look at three.

These Funds Went From First to First

1. Vanguard Primecap Core VPCCX
2. Fidelity Capital & Income FAGIX
3. American Funds New Economy ANEFX

Vanguard Primecap Core and its sibling funds have long been fond of healthcare and semiconductors. That combo put the fund in the top percentile of its peer groups last year, and its 22% gain through Oct. 27 has it in the top 2% again this year. Holdings like Micron Technology MU and Intel INTC are riding the AI wave to huge gains. Side note: I own this fund.

High-yield fund Fidelity Capital & Income is up 6.5% this year to put in the top percentile after a big year in 2025. A 20% equity weighting that features Micron Technology is a big part given that bonds in general have been weak in the face of rising inflation. Manager Mark Notkin has pursued an AI theme to his bond holdings as well, making for a banner year for the fund.

American Funds New Economy is also on a hot streak. It returned 31% in 2025 and is up 18% this year, placing it near the top of global growth for both years. Micron Technology, SK Hynix SKHY, and Taiwan Semiconductor TSM have been huge winners for the fund. The fund’s strategies are meant to find growth drivers in the global economy, and the managers have certainly delivered of late.

Salute to these funds for capturing remarkable technology early on and holding on even though valuations look stretched at times. The tricky bit for fund investors and stock investors alike here, though, is figuring out how much momentum is left in these names.