Davis Opportunity Fund Outperforms S&P 1500 in 2025

Fund returns +22.02% vs. +17.02% for benchmark

Jan. 29, 2026 at 1:07pm

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In 2025, the Davis Opportunity Fund returned +22.02%, dramatically outperforming the S&P 1500 Index's +17.02% return. The fund's results were driven primarily by consciously chosen investment ideas ranging from healthcare services and technology shares to financial services. The fund trades at a steep discount to the S&P 1500 Index yet its earnings per share growth rate over the last five years was well ahead of the index.

Why it matters

The U.S. stock market has shown notable resilience with three consecutive years of double-digit returns, but is also trading at high valuations with a concentration in a few mega-cap tech companies. In this environment, the fund manager believes active management is critical to be selective at the security level and maintain rational diversification, advising clients to decrease exposure to passive indexes with stretched valuations.

The details

The fund's investments span healthcare, technology, and financial services companies that the manager believes have financial strength, experienced management, and enduring competitive advantages. Key holdings include UnitedHealth, Viatris, Quest Diagnostics, Meta Platforms, Alphabet, Amazon, Capital One Financial, and Wesco International.

  • The fund returned +22.02% in 2025.
  • The S&P 1500 Index returned +17.02% in 2025.

The players

Davis Opportunity Fund

An actively managed equity fund that aims for long-term growth of capital.

S&P 1500 Index

A broad-based index that covers approximately 90% of U.S. market capitalization.

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The takeaway

This case highlights the potential benefits of active management in a market environment marked by high valuations and concentration in a few mega-cap stocks. The Davis Opportunity Fund has delivered strong returns by being selective and maintaining rational diversification, offering investors an alternative to passive indexes with stretched valuations.