The S&P 500 Index finished last year strongly with a 25% total return (including dividends) after previously delivering a 26.3% return in 2023.
This marks two consecutive years of above average returns for the widely tracked benchmark index for US investors.
Better than expected US economic growth combined with continued enthusiasm for the prospects of artificial intelligence helped propel the index higher in 2024.
This has been a boon for investors who use low-cost Exchange-Traded Funds (ETFs) to track the performance of the S&P 500 index for exposure to US equities. However, it has proved to be more difficult for many actively managed US equity funds.
Only 41 actively managed US equity funds out of 290* available for distribution in Singapore delivered returns above the S&P 500 index in 2024, according to data compiled from FE fundinfo.
Even fewer funds were able to comfortably beat the S&P 500 index by double digits, due to the outsized contribution from the largest index constituents such as Nvidia, which gained over 170% in 2024.
Below, FSA highlights five actively managed investment funds focused on US equities that beat the S&P 500 return by 10% or more in 2024.
Alger Focus Equity
This fund delivered a 51.8% return in 2024, over double the return of the S&P 500 index for the year.
Managed by Alger’s Patrick Kelly and Dr. Ankur Crawford, the firm’s investment approach focuses on growth investing, and finding companies undergoing “positive dynamic change”.
Outsized exposure to Nvidia (which accounted for 11.14% of the strategy at year-end) helped enable this fund to outperform last year. Its large positions in the other mega-cap tech stocks such as Microsoft and Apple also contributed.
But one investment that helped this strategy perform better than the rest was its large position in AppLovin, one of the best performing US stocks last year which surged over 800%.
Alger American Asset Growth
This fund delivered 46.1% in 2024. Like the fund above, it is managed by Patrick Kelly and Dr Ankur Crawford.
However, it also has Alger chief executive officer and chief investment officer Dan Chung listed as a co-manager.
This fund differs from the previous strategy in that its average holding size is slightly smaller by comparison, and it has more positions (70 versus 50). It has a much larger position in Amazon for example, at 9.38% of its portfolio versus 5.87%.
Like the previous strategy, outsized gains from its overweight positions in AppLovin and mega-cap tech stocks contributed significantly to its outperformance.
MS US Growth
This fund delivered a 41.2% return in 2024. It is managed by Dennis Lynch, with Sam Chainani, Armistead Nash, David Cohen and Alexander Norton named as co-managers.
The investment approach focuses on finding companies with sustainable competitive advantages with an ability to deploy capital at high rates of return.
Unlike the previous two funds, it doesn’t hold most of the mega-cap technology stocks that drove the S&P 500 return last year.
It instead favours “smaller stocks that have the potential to disrupt industries even if they appear expensive using traditional valuation methods”, according to Jeffrey Schumacher, director of manager research at Morningstar.
Some of these names include Cloudflare, Tesla and DoorDash, which are its largest three holdings.
MS US Insight
This fund delivered a 40.9% return in 2024, also managed by the same team led by Dennis Lynch.
The strategy follows a similar investment approach, with one difference being it invests further down the market capitalisation spectrum, including slightly smaller listed companies.
Although the top-10 holdings of this strategy are largely similar to its peer above, with holdings in such as Cloudflare and Tesla, it also holds smaller firms such as Samsara and Global-E Online, which are just $24bn and $9bn in size.
T. Rowe Price US Blue Chip Equity
This fund was up 35.3% in 2024, just over 10 percentage points higher than the S&P 500 index return.
It is managed by Paul Greene, who focuses on investing in a diversified portfolio of large- and mid-sized “blue chip” companies in the US.
With 77 positions, its largest are in the likes of Apple (9.7%), Amazon (9.58%) and Microsoft (9.58%).
Apple was one of its largest contributors to performance, alongside Meta and Tesla which made up 4.7% and 3.88% of the fund by year-end.
*The performance figures are based in US dollars. The data only includes funds that fall under the Singapore Mutual equity sector according to FE fundinfo data.
