Despite grim economic news from China and Europe, as well as fiscal cliff fearmongering, mutual funds have had a pretty good run in 2012. Small-, mid- and mixed-cap growth funds delivered strong returns, and hot sectors like biotechnology soared.
While all bets are off if the U.S. fails to avert the fiscal cliff, rising inflation and slow economic growth in 2013, I think defensive sectors like healthcare could do well next year. Large-cap, value-oriented mutual funds like the Vanguard Health Care Fund (MUTF:VGHCX) are well diversified and could perform well with low volatility.
But before we get ahead of ourselves, let’s look back at some of the best (and worst) mutual funds of the past year. We screened funds with more than $100 million in assets, eliminating those with a minimum initial buy-in of $100,000 or more so we could focus on funds more accessible by regular retail investors. The data reflects year-to-date mutual fund performance, and top holdings are from the most recent available information: