There are few things you can count on in the market.
The investment environment is always changing. Thus, what works in the past is indeed no guarantee of future success.
The caveat would be with respect to managers of large-cap mutual funds.
While it is always difficult for any fund manager to beat the market, it is even more so when limited to buying large-cap stocks only.
By their very nature, a diverse portfolio of large-cap stocks is going to look very similar to an index.
Companies owned by these funds are so large and widely followed that rarely is there inefficiency to exploit.
That’s why following a large-cap manager that can beat the index is truly astounding — and when that outperformance is large, even more so.
Last year the Goldman Sachs Large Cap Growth Insights (NYSE: GLCGX) trounced the market with a gain of 16.8%.
The top holdings of the fund include a number of large bio-pharma names that did very well last year and have started 2015 where last year left off.
In addition, its largest holding is Apple (NASDAQ: AAPL).
Shares of Apple did very well last year and look to do even better in 2015.
The stock is still cheap relative to expected profit growth, and by all indications the holiday season was very good for sales of its newest iPhone.
While the concentration in key sectors like technology and biotechnology increase risk, it also increases the likelihood that this Goldman fund will once again beat the market.
Another big winner last in the large-cap category was Columbia Large Growth Quantitative A (NYSE: RDLAX). The fund generated a 16% return in 2014.
Like the Goldman Large Cap Growth fund, the Columbia fund scored on its investment in Apple. In fact, the stock is now up to more than 7% of its total portfolio.
That’s heavier concentration in one stock . . . but what a good stock to have in your portfolio.
That concentration is offset by a bit more diversification compared to the Goldman fund.
While biotech stock Gilead (NASDAQ: GILD) is in the top 10 holdings of the fund, it is the only biotech stock in the mix.
Other names of top 10 holdings in the Columbia fund include Home Depot (NYSE: HD), MasterCard (NYSE: MA) and Southwest Airlines (NYSE: LUV).
All three of those big stocks are poised for big gains in 2015.
Southwest Airlines reported earnings on Thursday that exceeded expectations and gave an upbeat outlook for the current year. Shares soared another 6%.
Home Depot should benefit from the continued rebound in housing and historically low interest rates.
As for MasterCard, the company is poised to benefit greatly from an increase in consumer spending. Low gasoline prices should spur spending of not just those savings, but a little bit extra too.
Euphoria is a powerful drug. Consumers feeling good simply spend more than they intend.
That will benefit MasterCard and likely result in the company beating current expectations.
To beat the market with a large-cap portfolio is truly astounding. Both the Goldman fund and the Columbia fund merit consideration simply for their stellar performance last year.