The Best Growth Mutual Funds To Fuel Long-Term Capital Growth

Forbes

4 hours ago

In investing, patience is rewarded.
Mutual funds can deliver on several investment goals, with capital appreciation being near the top of the list. Growth mutual funds consolidate fast-moving companies into one portfolio, which can yield exciting results.
The funds highlighted below cover a range of exposures and include both active and passive management styles. Despite the strategy differences, they align on the objective of delivering above-market returns for their shareholders.
Methodology Used For These Mutual Fund Picks
This list of growth mutual fund picks includes options targeting a range of exposures, from up-and-coming domestic small caps to foreign multinationals. They additionally meet these criteria:
6 Best Growth Mutual Funds For Capital Growth
The table below highlights six top growth mutual funds that meet the noted parameters. Reviews of each fund follow.
1. Fidelity Small Cap Growth Index Fund (FECGX)
FECGX by the numbers:
Fidelity's small cap growth fund tracks the Russell 2000 Growth Index. The index includes Russell 2000 companies that outperform peers on EPS growth and sales per share growth. The average five-year EPS growth for the group is 18.66%, about 50% higher than the 12.29% growth average among broader Russell 2000 companies.
Historically, small caps have provided important diversification for stock portfolios. Smaller companies are riskier and more volatile, because they can have less predictable business performance and reduced access to capital. But smaller companies can grow faster than bigger ones, as they did between 2000 and 2012. While large caps have been dominant in recent years, many analysts believe this is a cyclical trend that will reverse itself. A conservative position in small caps prepares you for that reversal.
2. Fidelity Mid Cap Growth Index Fund (FMDGX)
FMDGX by the numbers:
The Fidelity Mid Cap Growth Index Fund replicates the performance of the Russell Mid Cap Growth Index. The index isolates the growth-oriented companies of the Russell Mid Cap Index. These fast-movers are identified by high price-to-book ratios, two-year growth outlooks and historic sales per share growth.
High-growth mid caps are poised to become the next large caps. Companies to watch in this portfolio include the AI darling Palantir Technologies (PLTR) and crypto exchange Coinbase (COIN).
Middle-sized companies are more nimble than large caps and more stable than small caps. They can outpace large companies when the economy is expanding and they hold up better than small companies when the economy is contracting. Mid caps can also offer cheaper valuations than large caps—though Palantir is a notable exception.
3. Schwab US Large-Cap Growth Index (SWLGX)
SWLGX by the numbers:
Schwab's large-cap growth fund invests in the Russell 1000 Growth Index. The index includes growth stocks that are also among the 1,000 largest U.S. companies by market capitalization.
In five of the last six years, SWLGX has produced annual returns from 27.53% to 42.66%. 2022 was the exception; a broad technology sell-off in that year pushed SWLGX to a 29.16% decline.
SWLGX has more than 50% concentration in the Magnificent Seven stocks: Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOG) and Tesla (TSLA). The group earned the name by driving much of the S&P 500 gains in recent years. Given their collective performance, it's hard not to prioritize them in a growth portfolio.
Beyond the Magnificent Seven, SWLGX also includes payment processor Visa (V), pharma stock Eli Lilly (LLY), club store Costco (COST) and Home Depot (HD)—solid performers in their own right.
4. American Funds New Perspective Fund (ANWPX)
ANWPX by the numbers:
The New Perspective Fund invests in stocks that benefit from growing global trade. Portfolio companies are multinationals, each with a significant business presence outside their home country. About 53% of the fund's assets are U.S. equities, 43% is in foreign stocks and the remainder is held in cash.
ANWPX is an actively managed fund, meaning the fund managers are making strategic trading decisions—rather than relying on an index to define the portfolio. Active funds can and sometimes do beat the market but they also charge a higher expense ratio than index funds. ANWPX has made the trade-off worthwhile in recent years, outperforming the MSCI All Country World Index and the Morningstar Global Large-Stock Growth category average in the prior 10-year and five-year periods.
The portfolio includes many recognizable names in a composition you won't find in an index fund. Top holdings include Meta Platforms (META), Microsoft (MSFT), Taiwan Semiconductor (TSMC) and French eyewear company EssilorLuxottica (ESLOF).
5. Vanguard International Explorer Fund (VINEX)
VINEX by the numbers:
The Vanguard International Explorer Fund invests in smaller growth companies located outside the U.S. The focus is on developed markets in Europe and the Pacific, though emerging markets stocks comprise 7.4% of the assets. The portfolio's median market capitalization is $4 billion, and its earnings growth rate is 14.6%.
VINEX provides diversified exposure to foreign small caps—about 350 companies spread across 20 countries. The fund can be volatile, but the portfolio has strongly outperformed U.S. small caps in the last year, returning 12.52% compared to FECGX's 3.5% return.
Due to its volatility, you would hold this fund in a relatively small proportion alongside larger positions in domestic and foreign large caps.
6. Vanguard International Growth Fund Investor Shares (VWIGX)
VWIGX by the numbers:
VWIGX invests in non-U.S. large caps with growth characteristics. Portfolio companies are primarily located in Europe (48.6%), emerging markets (21.1%), the Pacific (17.2%) and North America (12.2%). The fund's median market cap is $90.4 billion and the earnings growth rate is 25.3%.
Vanguard's international large-cap growth fund holds interesting companies that may be too volatile for most investors to hold as individual positions. Examples include ecommerce giant MercadoLibre (MELI), Chinese tech company BYD (BYDDY) and Dutch semiconductor company ASML Holding NV.
VWIGX earned a Silver rating from Morningstar in 2025, for excelling in process, performance, people, parent and price. The fund has a long-term focus, but its managers occasionally make opportunistic moves into stocks with trend-driven upside or those with underestimated potential.
The fund can be volatile, so most investors will hold it as a diversifier rather than a core position.
Bottom Line
Growth investing is high risk and high reward. You can mitigate some risk through diversification and long holding periods. The diversification limits your dependence on one company, industry or economy. And long holding periods prevent you from realizing losses created by short-term volatility. In investing, patience is rewarded.