1. Mutual Funds
The top-performing mutual fund so far this year is Matthews India Fund, which has gained more than 66% so far this year. The fund’s expense ratio of 1.03% is relatively low when compared to other top-performing funds this year. The fund had slightly more than $1 billion in assets under management as of November. While the fund charges a 2% redemption fee, it does not carry any distribution fees, known as 12b-1 fees, which are charged to investors by a fund’s parent in order to cover fund marketing expenses.
Overall, India equity funds have performed exceptionally well this year. As a class, these funds have gained 47.1% so far this year, according to Morningstar. Numerous ETFs focusing on the country have also been up considerably on optimism surrounding the election victory of Prime Minister Narendra Modi, who is expected to push for reforms in the emerging economy. India’s benchmark stock index, the S&P BSE Sensex, is up 33% year to date.
As with mutual funds, India-focused exchange traded funds dominate the list of best performing ETFs. Specifically, investors in India’s small cap stocks have fared best, with the iShares MSCI India Small-Cap ETF up almost 60% so far this year. Not far behind are the EGShares India Small Cap ETF and the Market Vectors India Small-Cap ETF.
However, investing in small cap stocks can be risky. While ETFs focused on small cap Indian companies and biotech have done well this year, others, such as Brazil and Russia small cap ETFs, have posted double-digit percent losses so far this year.
3. Large cap stocks
Southwest Airlines (NYSE: LUV) has been the top-performing stock on the S&P 500 this year through the first week of December. A number of simultaneous positive headwinds have helped push airline stocks higher, including an improving American economy, industry consolidation (which reduces profit-squeezing competition), and lower jet fuel prices. Also helping Southwest was the repeal of the Wright Amendment, which limited the number of destinations Southwest could fly to from its home base of Dallas Love Field. Optimism surrounding the company, as well as substantial growth in its operating and net income, have made 2014 a very strong year for Southwest thus far.
Initial public offerings have had a strong year in 2014. According to Renaissance Capital, an IPO research and investment management company, the number of U.S. IPOs launched in 2014 has increased by 25% from last year, while the total amount raised has reached $82 billion, 66% more than in 2013. In September, the Alibaba Group Holding Ltd.(NYSE: BABA) IPO broke records, raising almost $21.8 billion. Shares of the stock then took off, rising 38% on their first day.
However, no individual IPO has performed better than Radius Health (NASDAQ: RDUS), a newly public biotech stock focusing on osteoporosis treatment. Since it was priced on June 5, shares have risen 203%. The company, however, is still quite small. It is also quite risky, with a book value of just $23 million and a net loss of $17 million in the most recent quarter. Another huge gainer — with shares also up 200% — is HD camera maker GoPro (NASDAQ: GPRO). This stock, too, is not for the faint of heart, with many investors willing to pay hefty amounts to bet against GoPro.
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