US Stock Funds Extend Winning Streak With 14.6% Average in 2025

TLDR

• US stock funds delivered an average return of 14.6% in 2025.
• This marks the third consecutive year that US stock funds stayed above the 10 percent return mark.
• Technology and AI-related stocks remained the primary drivers of market gains throughout the year.
• The fourth quarter contributed a 2.5 percent return to the overall yearly performance.
• President Donald Trump’s tariff announcement in April shifted market leadership back to large-cap tech stocks.

US stock funds closed 2025 with a 14.6% average return, marking a third consecutive year above the 10% threshold, as investors continued allocating to equities despite fluctuating sentiment and global events, and quarterly gains supported the year-end rise.

US Stock Funds Rise Despite Tariffs

US stock funds gained 2.5% in the fourth quarter, lifting the full-year average return to 14.6%, according to LSEG data. The performance, recorded through December 24, followed returns of 21% in 2023 and 17.4% in 2024.

Although the pace of gains slowed each year, the direction remained upward, as investor optimism persisted through policy changes and market rotations.

A small number of technology stocks linked to artificial intelligence drove most gains, with broader participation falling short of expectations. “The market dramatically narrowed again,” said Ellen Hazen of F.L. Putnam Investment Management.

She attributed the shift to policy changes in April when President Donald Trump announced sweeping tariffs on what he called Liberation Day.

That policy move reversed early signs of market broadening, returning focus to the dominant large-cap technology firms. Hazen explained, “Everyone thought the AI trade was over,” but it returned with force.

She added that although AI-related yellow flags have emerged, they are not enough to reverse broader optimism heading into 2026.

Global and Bond Funds Reshape Allocation

International stock funds outperformed their US counterparts, rising 29.8% in 2025, compared to 4.8% in 2024. Early-year tariff disruptions helped shift global capital flows.

Investors reallocated assets as global markets gained strength while US equities continued upward at a slower pace. Cash shifted rapidly during mid-year volatility.

Investment Company Institute data showed US stock funds and ETFs saw $391.6 billion in outflows during the year. Most outflows occurred in July.

Investors moved capital into more stable vehicles, including bonds and international stock funds. Global equity funds received $102.1 billion in net inflows.

Bond funds attracted $669.4 billion in new money, led by interest in investment-grade debt. Those funds returned 7.3% in 2025.

The Federal Reserve cut rates three times during the year. Bonds added 1.1% in the fourth quarter alone.

Large-Cap Managers Lead Actively Managed Funds

Top-performing US stock funds concentrated holdings in large-cap technology and AI-related companies. The leading fund, Permanent Portfolio Aggressive Growth Portfolio (PAGRX), returned 36.9%.

PrimeCap Odyssey Growth Fund (POGRX) followed with a 33% gain. Four Alger funds also ranked in the top ten.

Alger Capital Appreciation Portfolio (ALVOX) posted a 32.9% return, maintaining investor attention on aggressive growth themes. Large-cap strategies remained dominant.

Across the broader market, 1,185 funds with $50 million or more in assets delivered an 11.5% average return. That performance helped extend the current streak of annual gains.

Despite fund outflows, performance across categories remained strong. Investors stayed committed to core holdings throughout policy shifts and economic uncertainty.

The outlook for 2026 remains open, with technology earnings and macro policy in focus. Hazen said other sectors could expand returns if growth materializes.

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