Ten years are certainly a lot of time for funds to prove their mettle. Occasional hiccups or economic events may deter a funds performance. But over the long term a fund should ideally be able to post positive returns. If that is not the case, then we are compelled to question how those underperformers are still around. In a previous article we identified the funds with worst performances in 10 years. Now, its time we look at the 10 best performing funds this last decade.

Stepped-up economic activity, rising business and consumer confidence, record corporate profits, recovering housing fundamentals and continued job creation injected optimism into the economy. The last 10 years witnessed a housing bubble, a collapse and its gradual recovery. The housing market is currently brimming with confidence, far from the lows of 2009. Separately, the labor market looks good with the unemployment rate hitting a five-and-a-half-year low.

As for the GDP annual growth rate, 2008 and 2009 were the only years when the economy witnessed contraction since 2005. In 2008 and 2009, GDP had contracted 0.3% and 2.8%, respectively. However, the best annual growth rate was registered back in 2005, when the economy grew 3.3%. Never has the economy notched a 3% rate in the 10 ensuing years. While 2006 followed closely with a 2.7% growth rate, 2007s growth was down to 1.8% and then there were the two years of contraction. The economy rebounded in 2010 at a 2.5% clip and has consistently been in the green since then but the 3% growth rate has been elusive.

As 2015 is not turning out to be a year of robust growth, it is unlikely that GDP will finally hit the 3% mark. Bloomberg had predicted that the economy would have to grow at a 4.75-percent rate during the final two quarters of 2015 to reach 3 percent for the year. However, the recently reported GDP third estimate for the second quarter recorded growth of 3.9%.

Markets have also been up against a multitude of headwinds. However, the 10-year gains for the benchmarks are still encouraging. The Dow Jones Industrial Average, Standard & Poors 500 and Nasdaq Composite Index have gained 48.2%, 55% and 113.4%, respectively, over the last 10 years. Riding on the wave weve also spotted the mutual funds that have come up with the best 10-year absolute returns.

In our previous article, we highlighted attributes essential for a funds success. Obviously, fund performance is the key criteria. So, below we highlight funds that now have the best absolute returns over the last 10 years. They do not carry sales load and have a relatively low expense ratio.

We have narrowed down our search based on Zacks Mutual Fund Ranks. The following funds carry either a Zacks Mutual Fund Rank 1 (Strong Buy) or a Zacks Mutual Fund Rank 2 (Buy) as we expect them to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also takes into account the likely future success of the fund.

The minimum initial investment for these funds is within $5000.

Return calculated using Google Finance (as of Sep 30)

T. Rowe Price Health Sciences(PRHSX) invests a major portion of its assets in common stocks of companies involved in research, development, production, or distribution of health care related products and services. PRHSX currently carries a Zacks Mutual Fund Rank 2. Its year-to-date and 1-year total returns are 8.1% and 19.7%, respectively. The 3- and 5-year annualized gains are a respective 23.4% and 28.3%. Annual expense ratio of 0.77% is lower than the category average of 1.35%.

Janus Global Life Sciences T(JAGLX) invests a large chunk of its net assets in companies from the health care sector. JAGLX invests a minimum of 25% of its assets in companies from the life sciences sector. JAGLX currently carries a Zacks Mutual Fund Rank 2. Its year-to-date and 1-year total returns are 6.3% and 17.1%, respectively. The 3- and 5-year annualized gains are a respective 30.7% and 25.6%. Annual expense ratio of 0.92% is lower than the category average of 1.35%.

Fidelity Select Biotechnology Portfolio(FBIOX) invests a large share of its assets in companies primarily involved in research, development, manufacture, and distribution of various biotechnological products. FBIOX currently carries a Zacks Mutual Fund Rank 1. Its year-to-date and 1-year total returns are 5.5% and 19.6%, respectively. The 3- and 5-year annualized gains are a respective 31.7% and 32.2%. Annual expense ratio of 0.74% is lower than the category average of 1.35%.

Fidelity Select IT Services Portfolio(FBSOX) invests a minimum of 80% of its assets in US and non-US firms that provide information technology services. FBSOX currently carries a Zacks Mutual Fund Rank 1. Its year-to-date and 1-year total returns are 5.5% and 17.6%, respectively. The 3- and 5-year annualized gains are a respective 19.5% and 18.4%. Annual expense ratio of 0.81% is lower than the category average of 1.47%.

USAA Science & Technology(USSCX) invests a lions share of its assets in equity securities of companies that are believed to gain from technological development and advancement. USSCX may invest a maximum of half of its assets in securities of companies located in foreign lands. USSCX currently carries a Zacks Mutual Fund Rank 1. Its year-to-date and 1-year total returns are 1.2% and 10.2%, respectively. The 3- and 5-year annualized gains are a respective 17.9% and 16.7%. Annual expense ratio of 1.24% is lower than the category average of 1.47%.

Fidelity Select Retailing Portfolio(FSRPX) invests a large chunk of its assets in securities of retailing companies that are traded within the domestic boundary. FSRPX currently carries a Zacks Mutual Fund Rank 2. Its year-to-date and 1-year total returns are 8.3% and 20.6%, respectively. The 3- and 5-year annualized gains are a respective 20.6% and 20.1%. Annual expense ratio of 0.81% is lower than the category average of 1.46%.

Fidelity Select Leisure Portfolio(FDLSX) normally invests the majority of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries. FDLSX currently carries a Zacks Mutual Fund Rank 1. Its year-to-date and 1-year total returns are 0.5% and 7.4%, respectively. The 3- and 5-year annualized gains are a respective 16.1% and 15.5%. Annual expense ratio of 0.80% is lower than the category average of 1.46%.

Fidelity Select Medical Delivery Portfolio(FSHCX) invests a major portion of its assets that are mainly involved in operations related to hospitals, nursing homes and other organizations engaged in providing health care services. FSHCX currently carries a Zacks Mutual Fund Rank 1. Its year-to-date and 1-year total returns are 2.4% and 11.9%, respectively. The 3- and 5-year annualized gains are a respective 19.2% and 18.8%. Annual expense ratio of 0.79% is lower than the category average of 1.35%.

HartfordHealthcare HLS IA(HIAHX) invests a large chunk of its assets in equities of health care-related companies across the globe. HIAHX currently carries a Zacks Mutual Fund Rank 2. Its year-to-date and 1-year total returns are 4.9% and 16.5%, respectively. The 3- and 5-year annualized gains are a respective 26% and 22.7%. Annual expense ratio of 0.88% is lower than the category average of 1.35%.

Fidelity Select Health Care Portfolio(FSPHX) invests most of its assets in companies involved in designing, manufacturing and selling health care products and services. FSPHX currently carries a Zacks Mutual Fund Rank 1. Though FSPHX has lost 0.07% year to date, its 1-year total return is 7.7%. The 3- and 5-year annualized gains are a respective 27.1% and 24.8%. Annual expense ratio of 0.74% is lower than the category average of 1.35%.

The list amply reveals the dominance of health care with 6 of the 10 funds belonging to this category. This is not surprising as health care has been a strong performer in the investment world. It was the top-most gainer in 2014 and has had a repeat performance in the first half of 2015. The bull run was halted recently though on pricing concerns, with health care and biotech companies, in particular, seeing a steep price decline. Looking at the fund families, Fidelity dominates the list with 6 funds featuring in the top 10.

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the Zacks Rank.

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