Why did some managed funds drastically outperform the market in 2020?

I saw a couple funds that I saw really outperformed the market in the last couple years. I completely get the lack of longevity of these types of things - and past performance not being an indicator - and high fees being a reg flag! - but how it is these funds so outperformed the market starting right around Covid. Does this have anything to do with Covid, and newer companies not on the S&P 500 (I.e. tech and med tech companies) making waves? The funds I had checked out were ZVGNX ZVNBX BPTRX.

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I definitely agree with your second sentence - strong outperformance is rarely sustainable and is a poor indicator of future success. You said it perfectly. It is far too often that active management charges high fees and fails to outperform the analogous index fund.

2020 was largely defined by “tech” and “growth” stocks being in favor (with some exceptions). For example, I am familiar with the Baron Partners ticker you listed above. They had a very sizable position in Tesla that helped push their performance up. At one point, I believe Tesla was 47% of the fund, which is CRAZY!!

If you have the time, this is a good summary that was written last year about the Baron fund.

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This article is super interesting, thanks for sharing! Yes I was more just curious than anything - 2020 seemed to be an exceptional year in a lot of ways. That’s insane Tesla was such a huge portion of that fund!


See if that fund outperforms in the next 10 years. Most likely no. There aren’t many funds that do, and if they do…fees.

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