Which fund managers actually outperform the S&P 500?

The S&P 500 has been both the greatest source of returns, and the greatest source of worry, for many investors in the last decade.

A roughly 240% return puts it comfortably ahead of the other major equity regions over a 10-year stretch but plenty of valid worries persist, whether that relates to valuations or the presence of the Magnificent Seven shares.

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The concentration of the index itself has made the US market notoriously difficult for active funds to beat, and that’s reflected in the struggle of stock pickers here. 

Active funds, which are either unwilling or unable to take as concentrated a bet on a handful of stocks as a tracker fund would, have found it difficult to consistently beat the market.

If we cast our eye over the performance of the mainstream US equity funds, and exclude those with a big bias to small or mid-cap shares, around 20 names have beaten the S&P 500 over five years. But even these tend to have a patchy record against the market.

The top funds, for now

Those funds that have come out on top boast some extremely strong returns, as shown in the table below. And perhaps unsurprisingly they are making some of the big bets we see in an S&P 500 tracker.

Let’s start with BlackRock US Dynamic D Acc (B87XJQ6), which has very nearly doubled investors’ money over half a decade. 

In recent times, it has gone for some notable bets: NVIDIA Corp (NASDAQ:NVDA) makes up 6.5% of this fund, not far off the 7.7% in an S&P 500 tracker. Amazon.com Inc (NASDAQ:AMZN) accounts for 6.3% of the BlackRock fund, with Alphabet Inc Class A (NASDAQ:GOOGL) on 4.8%.

A few standout names catch the eye, however. Micron Technology Inc (NASDAQ:MU), which has powered ahead in the last year, makes up 4.4% of the fund, suggesting the investment team has really run a winner here. The company accounts for around 1.5% of the S&P 500 by contrast.

The BlackRock fund also counts some more unusual names, such as Cardinal Health Inc (NYSE:CAH) and ATI Inc (NYSE:ATI), among its top positions. Its sector allocations are largely in line with those of the underlying market.

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Readers will see a similar trend with many of these funds, where they have bet big on members of the Magnificent Seven but have also shown conviction in some different names too. 

Take New Capital US Growth GBP Acc (B3M6FR8), which has almost 8% of its portfolio apiece in Nvidia and Alphabet but also lists Broadcom Inc (NASDAQ:AVGO), Lam Research Corp (NASDAQ:LRCX), Applied Materials Inc (NASDAQ:AMAT) and Palo Alto Networks Inc (NASDAQ:PANW) among its top holdings. 

This fund does look especially exposed to the ups and downs of the artificial intelligence (AI) trade, although healthcare name Eli Lilly and Co (NYSE:LLY) also sits in the top 10.

Source: FE Analytics, as at 21/07/26. Past performance is not a guide to future performance.

Investors should be aware that the winning US funds could, for now, be taking especially big bets on AI, leaving them in a bad spot if we do see some form of pullback on this front. 

But it’s encouraging to see that some different portfolios are among the top performers too, in the form of income funds.

BNY Mellon US Equity Income GBP W Inc (BD5M755) looks refreshingly different from the average fund operating in this market.

The fund, which has a yield of around 1.7%, has around a quarter of its portfolio in financials and 13.4% in healthcare. US banks have performed especially strongly since 2024, which might help to explain why some income funds are topping the performance tables.

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Its top 10 holdings list doesn’t include a single Magnificent Seven member, but instead consists of names such as JPMorgan Chase & Co (NYSE:JPM), UnitedHealth Group Inc (NYSE:UNH), Fifth Third Bancorp (NYSE:FITB), Colgate-Palmolive Co (NYSE:CL) and Cisco Systems Inc (NASDAQ:CSCO). It looks like it could offer diversification against the likes of an S&P 500 tracker.

The BlackRock American Income Trust Ord (LSE:BRAI) is more of a mixed bag, at least if we judge it by its top holdings. 

There’s Alphabet, Amazon and even Micron Technology in its top 10, but they sit alongside financials stocks like Berkshire Hathaway Inc Class B (NYSE:BRK.B) and JPMorgan Chase, as well as energy companies like Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX). The trust comes with a share price dividend yield north of 4%.

The consistency conundrum

All the funds in our list are comfortably ahead of the S&P 500 over that one time period. 

But they, and their peers, have struggled to beat the index with a decent measure of consistency. 

If we ask how many of the last five full calendar years (from 2021 to 2025) have seen such funds beat the S&P 500, the numbers are not flattering. BlackRock US Dynamic managed two years, as did many of the other top performers.

Investors might therefore either stick with a S&P 500 tracker, or an active fund that takes big bets on some of the same stocks and has a focus on growth stocks and AI, and attempt to pair it with a differently positioned fund. 

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Income funds can sometimes fit that bill, as can value funds and those that focus on small or mid-cap shares. Note that one fund with an explicit value bias, M&G North American Value GBP I Acc (B61S424), makes it into our table of top performers.

If we look at better-performing funds with a US small-cap focus over five years there’s CT American Smaller Coms(US) Z Acc GBP (B8358Z8), FTF Royce US Smaller Companies W Acc (BP9LKJ7) and the value-minded VT De Lisle America B GBP (B3QF3G6).

Investors might also look for funds with a distinctive approach, and one name that fits the bill here is Pershing Square Holdings Ord (LSE:PSH).

An extremely concentrated portfolio, Pershing Square once had a good record of consistently beating the S&P 500. But the fund has been in the doldrums in 2026, with a year-to-date loss of around 21% eating into its track record.

The team has bought into Magnificent Seven members such as Microsoft in recent months, setting it apart from some of the active global equity managers ditching such names on the back of AI spending concerns.

We recently interviewed manager Bill Ackman about the state of markets and his portfolio.