By Debbie Carlson
Last year gave savvy fund managers an ideal chance to prove their worth.
Things started off well for the stock market. Then they took an abrupt turn for the worse.
Anticipating Federal Reserve interest-rate cuts, tax cuts, and deregulation, most asset managers expected 2024's gains to persist. The good vibes proved to be short-lived after China, in January, unleashed a much cheaper artificial-intelligence model called DeepSeek to rival the lavishly hyped OpenAI. Then, in April, President Donald Trump's Liberation Day tariff announcements sent stocks and bonds spiraling downward.
Yet like an experienced climber who uses precise movements to find strong toeholds before advancing, the top active fund managers in Barron's annual Best Fund Families survey relied on their processes and research to uncover bargains across asset classes, profiting when markets rebounded.
As 2025 progressed, stock leadership changed, and a commitment to diversification and owning underappreciated names proved prescient. It was the first time in a few years that asset managers didn't have to own all Magnificent Seven stocks to just keep up with the indexes.
Capital Group ascended to the No. 1 spot by taking advantage of mercurial markets and seeing long-term bets pay off.
Martin Romo, Capital Group's chair and chief investment officer, says that while the Magnificent Seven companies still matter, he sensed markets would broaden in 2025, based on the firm's global research, which had been revealing better opportunities beyond the stretched valuations of the Big Tech names.
"If you went outside of tech, outside the U.S., outside the big companies, and looked for a little bit more value instead of just growth, it led us down a path to find these opportunities," he says.
Nimbleness and diversification were also hallmarks of the four other fund families that successfully scaled to our top-five summit in 2025. Coming in No. 2 through No. 5, respectively, were Fidelity Investments, Vanguard Group, Northern Trust Asset Management, and Lord Abbett.
For bond managers, 2025 was finally a year in which markets normalized and higher yields boosted returns, says Roger Hallam, global head of rates at Vanguard. "The backdrop for bonds today is just very different from where we've been over much of the post-financial-crisis regime," he says.
Early market turmoil aside, 2025 was a pretty good year for investors. According to LSEG Lipper data, the average U.S. equity fund rose 14.9%, while world equity funds gained 29%. Taxable bond funds rose 6.5%, while municipal bond funds returned 3.7%. Mixed-asset funds rose 15.5%.
Barron's has conducted its annual survey of fund families for more than 20 years, focusing on calendar-year relative performance for the primary ranking, which offers a glimpse of how diversified firms perform across a wide range of actively managed funds. It's a snapshot in time. As usual, though, several of the top families' biggest and best-performing funds of 2025 also demonstrate strong longer-term returns.
Because the Best Fund Families results are asset-weighted, firms' largest funds have the biggest impact on their rankings.
This year's survey welcomed Northern Trust Asset Management to the top five for the first time in recent years, while Capital Group and Vanguard returned for the first time since 2022 and 2020, respectively. Fidelity moved up from No. 3 in 2024, and Lord Abbett moved down to No. 5 from the top spot.
This Year's List
To be included in the ranking, firms must have offered at least three actively managed mutual funds or active exchange-traded funds in Lipper's general U.S. stock category, plus one in world equity and one mixed-asset, such as a balanced or asset-allocation fund. They also needed to offer at least two taxable bond funds and one national tax-exempt bond fund. All funds on our list must have a track record of at least one year. The ranking also includes "smart beta" ETFs, which are run passively but built on active investment strategies. The list reflects each firm's active-management ability.
All told, just 46 asset managers out of the 795 in Lipper's database met our criteria for 2025. There were a few changes to this year's list. Simplify debuts at No. 41, and it is the first time an all-ETF asset manager had enough funds across asset classes to qualify. Its inclusion demonstrates how active ETFs are becoming a bigger part of the asset-management industry after they were approved by the Securities and Exchange Commission in 2019.
Nomura Asset Management is the other newcomer, joining the list after acquiring Macquarie's U.S. asset-management business. We said goodbye to Amundi, as it is now part of Victory Capital Management. Madison Funds and Neuberger Berman were dropped, as they no longer have enough qualifying funds to be included.
Many other large fund managers are consistently absent because they don't check all of the boxes in the categories we consider. Notable names in that category include Janus Henderson and Dodge & Cox.
No. 1: Capital Group
Capital Group runs the American Funds -- some of the biggest funds by assets in the U.S. -- and because Barron's results are asset-weighted, strong showings by its top funds catapulted the firm to our top spot.
The firm manages the biggest mixed-asset fund in the survey, the $274.8 billion American Balanced fund. Its 18.8% return bested 91% of its Lipper peers, as it owned some of 2025's big winners in its top 10, including Taiwan Semiconductor Manufacturing and memory-chip maker Micron Technology, the second-biggest S&P 500 gainer with a 240% return. Its No. 11 holding was South Korean semiconductor SK Hynix, which returned 286%.
The asset manager's largest general-equity fund, the $336.4 billion Growth Fund of America, also contributed to its 2025 win. The fund beat 88% of its Lipper peers with a 20.2% return. In addition to owning Broadcom and Alphabet in its top 10 holdings, it also held Micron.
Capital Group has $2.8 trillion across its 102 U.S.-listed active mutual funds and ETFs. The firm splits investment duties across multiple managers in each fund, carving out a slice for each manager to invest in their highest-conviction ideas. A principal investment officer oversees the fund's makeup to ensure balance and commitment to mandate.
Names like Taiwan Semi and SK Hynix exemplify how Capital Group broadened its holdings beyond U.S. megacap technology names and still found strong returns, Romo says.
The universal theme behind 2025's performance came from managers relying on Capital Group's deep global research to stay confident during uncertainty, whether it was having a long-term outlook on an unloved stock or buying when the market swooned, he says.
Romo is also the principal investment officer of the $178.4 billion Investment Company of America fund, which gained 20.8% in 2025, beating 91% of its Lipper peers. He says his long-term picks of GE Aerospace and Royal Caribbean Group paid off in 2025, and he used the April selloff to increase positions in Nvidia and Eli Lilly.
Among the winning moves Capital Group made in fixed income in 2025 was playing the differences between U.S. and German bond yields and using the tariff announcement to increase their credit exposure.
No. 2: Fidelity Investments
The April tariff-ignited market rout reverberated across equites and fixed-income markets. In the heat of the moment, the selloff felt different than other corrections, says Robin Foley, head of Fidelity's fixed-income division.
"It was kind of a strange time," she says. "When the market goes volatile, it becomes more important than ever to get together and understand what's happening."
The uncertainty of how tariffs would shake out led Fidelity equity managers to revisit the deep research the asset manager is known for and think long term. Brian Enyeart, co-head of equity, says portfolio managers focused on pair trades, swapping out good names for better ones, as well as looking for potential secular winners and repositioning portfolios.
Early volatility aside, Enyeart says shifts in market leadership helped many growth, core, and value managers to outperform their indexes.
Once again, Fidelity's biggest general-equity fund, the $176.3 billion Contrafund, outperformed, beating 93% of its Lipper peers with a 21.8% gain. In a fourth-quarter commentary, manager Will Danoff attributed the quarter's gains to holdings in Elon Musk's private Space Exploration Technologies; electronic and fiberoptic connectors manufacturer Amphenol, one of the S&P 500's biggest gainers with a 96% return; and to selling its small position in Oracle. The legendary manager will retire at the end of 2026, with Asher Anolic and Jason Weiner, his co-managers since April 2025, taking over.
Foley says fixed-income managers found opportunities during April's volatility but didn't jump to execute trades as bond markets were fragmented. Agency mortgage-backed securities and investment-grade bonds were standouts for the team. Strong earnings translated to strength in corporate bonds, and across sectors Fidelity saw good bond yields relative to Treasuries, without sacrificing credit quality.
Fidelity has $6.8 trillion in assets and more than 525 ETFs and mutual funds. For many asset managers, ETFs are becoming a bigger part of the business, and that's true for Fidelity. The firm has 77 ETFs, with more than $150 billion in assets, says Greg Friedman, head of ETF management and strategy. The $24.5 billion Fidelity Total Bond ETF is one of the biggest, similar to the $42 billion Fidelity Total Bond fund.
Friedman says ETFs are attracting a younger, different investor than a traditional mutual fund buyer, rather than seeing mutual fund investors swap for cheaper ETFs. "They have different demands and different needs, " he says.
No. 3: Vanguard Group
Vanguard returns to Barron's top five for the first time since 2020, led by a strong performance from the $75.7 billion Vanguard Primecap fund and its fixed-income offerings. With a 30% return, Vanguard's biggest active equity mutual fund beat 100% of its Lipper peers. A 17.2% return for the $62 billion hybrid Vanguard Equity Income fund also boosted Vanguard's standing.
Notable Primecap winners included Micron and semiconductor wafer fabricator KLA, while Equity Income owned Johnson & Johnson and Gilead Sciences.
Vanguard's equity funds are managed externally, and big funds like Primecap saw a string of underperformance from 2019 through 2021 and again in 2024, in part from stylistic headwinds. Barron's asset-weighted survey means a middling-to-poor showing by an asset manager's biggest equity funds can push down the firm's overall ranking.
The firm manages its mixed-asset and fixed-income funds internally, and altogether has $1.9 trillion in 95 active funds. Vanguard's core philosophy of balanced and diversified portfolios played to its 2025 outperformance.
The mixed-asset category, as well as strength in domestic bonds and international holdings, lifted Vanguard's target-date funds, with many returning 18% to 20%, rivaling large-cap performance with less risk. In a 60% equities/40% bond target-date fund, 40% of its equities' allocation is in international stocks.
"This was the year international finally paid off," says Roger Aliaga-Diaz, global head of portfolio construction and chief economist, Americas, citing both dollar weakness and security selection for the gains.
Vanguard placed second in our taxable-bond category. Hallam, the firm's global head of rates, says the fixed-income teams took advantage of both credit and differences in global interest rates to boost returns. Managers overweighted both investment-grade corporate bonds and mortgage-backed securities in credit and underweighted Japanese government bonds, expecting that the Bank of Japan would raise rates.
A bumpy municipal-bond market offered Vanguard a chance to lock in yields rarely seen in decades, says Paul Malloy, head of municipals. Muni prices fell as tax policy debates under the One Big Beautiful Bill Act hinted at ending munis' tax-exempt status early in the year. Although that didn't happen, weakness lingered. By August, tax-adjusted muni yields for high-quality bonds reached 7% to 8%, he says. Vanguard bought structured products and housing bonds, and favored buying bonds below par.
The $84.6 billion Vanguard Intermediate-Term Tax-Exempt fund, the largest tax-exempt fund in our survey, had a total return of 5%, beating 79% of its peers.
"This is as good as fixed income has looked, in general, in a long time, " Malloy says.
No. 4: Northern Trust Asset Management
Northern Trust Asset Management looks at active management three ways across its 40 active mutual funds and ETFs, says Anwiti Bahuguna, global co-chief investment officer and CIO of multi-asset investments.
The firm employs quantitative strategies across the platform to build stock portfolios that use companies' fundamental information in a systematic and risk-controlled way. The multi-asset funds are top-down tactical asset-allocation funds that actively pursue ideas across regions and asset classes. They also use external specialist multimanagers to actively manage some funds.
The fixed-income funds also employ factors, with quantitative portfolios using value and quality for security selection, while fundamental portfolio managers incorporate quantitative signals with credit research, says Christian Roth, global co-chief investment officer.
For both the equities and fixed-income funds, the managers are "index aware," mindful of the defined index universe for the particular fund to avoid style drift, sector bets, or hidden concentration risks.
Bahuguna says in the first few months of 2025, it was difficult for active managers to outperform, since Mag Seven tech names still dominated. But by midyear, their quantitative models began to show market breadth improving and value factors starting to pay off.
That benefited their two biggest equity funds, the $680 million Northern Small Cap Value and the $346 million Northern Large Cap Core, which have value and quality tilts. Small Cap picked up Hecla Mining and Coeur Mining, and each rose more than 200% in 2025. Large Cap Core added Newmont, Broadcom, and luxury-goods holding company Tapestry, aiding its 21.8% return and helping it beat 90% of its Lipper peers.
Those names represent value, quality, and momentum -- the factors that Northern Trust targets, Bahuguna says, adding that "this combination was absolutely unbeatable last year."
Northern Trust's active fund assets total $544 billion, and last year the asset manager expanded its global quantitative investment team by 13 people who were part of Dutch pension APG Asset Management, known for its quantitative research.
Bahuguna says the additional personnel brought insightful ways of reviewing companies, such as evaluating a company's network effect. "This type of innovation is showing up in our equity portfolios," she says.
No. 5: Lord Abbett
For the second straight year, Lord Abbett, with $252 billion in assets, secured a place in our top five. Manager collaboration across asset classes is key for the asset manager, which was founded in 1929 after that year's stock market crash. Lord Abbett's portfolio managers combine a top-down macro approach to construct portfolios with bottom-up fundamental research on individual names for its 34 active strategies.
The asset manager entered 2025 with a bullish outlook, although that was tested during April's selloff. Steve Rocco, co-head of taxable fixed income, says working together was critical to staying the course. "We made sure to communicate well and not derisk the portfolio," he says, adding, "These were emotional times."
Once the market regained its footing, the firm's growth and value strategies benefited from earnings growth and broadening out from technology, Rocco says. Investments in AI and AI-adjacent companies was also a unifying theme across equities. "It's not just semiconductors. It's industrials, where you have exposure to data centers. It could be traditional HVAC and other companies that offer cooling equipment," he says.
In its biggest fund, the $7.2 billion Lord Abbett Growth Leaders, Nvidia and Alphabet contributed to gains, as did holdings in HVAC company Comfort Systems USA, which gained 226.8%
In fixed income, with spreads between U.S. Treasury bonds and other bonds tight, Rocco says the team limited duration rather than go out further on the yield curve, taking small opportunities when available. (Duration is a measure of interest-rate risk tied to a bond's or bond fund's maturity, yield, and other factors.)
High-yield bonds benefited from a strong corporate backdrop, but the firm benefited by staying higher in quality across the spectrum. Rocco says the team found opportunities in debt issued by metals miners and energy companies, and new issues from hyperscalers looking to start funding data centers.
Rocco is betting that 2026 will be another good year for active managers, with growth accelerating because of fiscal stimulus, strong corporate earnings, and the Federal Reserve likely to cut interest rates.
How We Rank the Fund Families
All mutual and exchange-traded funds are required to report their returns after fees are deducted, to better reflect what investors would actually experience. But our aim is to measure manager skill, independent of expenses beyond annual management fees. That is why we calculate returns before any 12b-1 marketing fees are deducted. Similarly, fund loads, or sales charges, aren't included in our calculation of returns.
Each fund's performance is measured against all of the other funds in its LSEG Lipper category, with a percentile ranking of 100 being the highest and one the lowest. This result is then weighted by asset size, relative to the fund family's other assets in its general classification. If a family's biggest funds do well, that boosts its overall ranking and vice versa.
To be included in the ranking, a firm must have at least three funds in the general equity category, one world equity, one mixed equity such as a balanced or target-date fund, two taxable bond funds, and one national tax-exempt bond fund.
Single-sector and country equity funds are factored into the rankings as general equity. We exclude all index funds but include actively managed ETFs and so-called smart-beta ETFs, which are passively managed but created from active strategies.
Finally, the score is multiplied by the weighting of its general classification, as determined by the Lipper universe of funds. The category weightings for 2025 were general equity, 38.2%; mixed asset, 21.5%; world equity, 16.5%; taxable bond, 20%; and tax-exempt bond, 3.8%.
The category weightings for the five-year results were general equity, 37.7%; mixed asset, 21.8%; world equity, 16.7%; taxable bond, 20%; and tax-exempt bond, 3.8%. For the 10-year list, they were general equity, 38.1%; mixed asset, 23%; world equity, 15.9%; taxable bond, 19.2%; and tax-exempt bond, 3.7%. (The totals may not add up to 100% because of rounding.)
The scoring: Say a fund in the general U.S. equity category has $500 million in assets, accounting for half of the firm's assets in that category, and its performance lands it in the 75th percentile for the category. The first calculation would be 75 times 0.5, which comes to 37.5. That score is then multiplied by 38.2%, general equity's overall weighting in Lipper's universe. So, it would be 37.5 times 0.382, which equals 14.33. Similar calculations are done for each fund in our study. Then the numbers are added for each category and overall. The shop with the highest total score wins. The same process is repeated to determine the five- and 10-year rankings.
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This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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February 26, 2026 01:00 ET (06:00 GMT)
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