15 Best Stocks at Top-Performing Mutual Funds (Update1)

BOSTON (TheStreet) -- Equity mutual funds aren't doing much better than the benchmark index this year when fees are added. That's after a disappointing 2011, when the average U.S. stock fund lost investors money. But taking a peek at the top holdings of this year's better-performing, highly rated funds narrows down the superior investment ideas.

And that may be the best way to use mutual funds, as investing in them can prove to be costly. The average return for the almost 9,400 domestic equity funds tracked by Morningstar is 10% this year, versus the S&P 500's 8.3% gain. Last year the same group fell 2.5% versus the 2.1% increase for the benchmark.

And that's why they're losing ground to exchange traded funds. Investors pulled $135 billion from domestic stock mutual funds in 2011, the fifth straight year of withdrawals, according to the Investment Company Institute.

But that's not to say that many U.S. stock funds aren't worth their fees.