• The shares double and the stock portfolios that hold it soar
  • At $260 billion, its added value this year trails only Apple

U.S. mutual funds struggling to get ahead of passive indexes this year had a solution handed to them on a platter: Alibaba Group Holdings Ltd.

Among 215 large-cap growth funds in the U.S., about one-third hold shares of the New York-listed Chinese e-commerce giant, according to regulatory filings compiled by Bloomberg. They’ve returned an average 33 percent this year, compared with 24 percent from managers with no stake.

Among funds with BABA on board, 89 percent are beating their benchmarks in 2017, versus 52 percent without it.

The gap exists because Alibaba has surged 113 percent and isn’t in any of the biggest American equity indexes. The increase of $260 billion in market value would’ve been like adding a second Apple Inc. were Alibaba in the S&P 500. But since it isn’t, owning it has been gravy for mutual funds measured against it.

“Alibaba has been the shining star,” said Todd Rosenbluth, director of ETFs and mutual funds research at…