Counter-Take, A Look At Growth Funds (SBGLX, RBCGX, LAGRX, PSTAX, VGRAX, CRM, PCLN, AAPL, ORCL, WYNN, AMZN, IWF, IVW)

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In times of uncertainty, most investors either go to bonds or go to defensive and dividend stocks.  So, why on earth is Zacks featuring its “Top 5 Growth Mutual Funds” as its Best in Class this morning?  We took a look there, but we also wanted to dig deeper in the sector and use other data as well to see what is happening in the world of growth funds, growth ETFs, and their top holdings.  It turns out that some companies and some sectors continue to grow over and over, and there are always some investors who will use times of weakness to accumulate mutual fund shares in hard times at discounted prices for their retirement funds.  Very few investors stick with “buying when the market is getting hit” but that is what long-term investors should do if they believe that growth will outpace defensive stocks and bonds through time.

What is interesting is that Zacks noted, “…the risk involved is much lower when compared to sectoral funds and may be reduced further by funds with a conservative approach.”  These funds have the #1 rank at Zacks, which it calls “Strong Buy” ratings.  Maybe our recent survey was right, showing that investors might actually be equally looking for bargains as they are cautious.  The AAII report from last week was far more bearish.

Legg Mason ClearBridge Large Cap Growth A (SBLGX) has the majority of its funds in equities or instruments with similar features, but they are tied to the Russell 1000 Growth Index. The growth mutual fund returned 33.67% in the last one year period.  The fund has relatively new management as Peter Bourbeau has managed this growth mutual fund since 2009.  This fund is ranked with only 2-stars by rival Morningstar and it is a higher-concentration fund as the top 10 assets account for almost 37% of the total holdings.  A high-concentration of fund assets like this will create good hits and bad misses from time to time, and its one-year return is only 15.04% as a result.

Reynolds Blue Chip Growth (RBCGX) is a growth fund that has equities with a minimum of $1 billion in market cap.  The fund’s three year annualized return is 22.66%, but it also has an expense ratio of 1.80% compared to a category average of 1.31%.  The top 10 assets here come to only about 7.94% of the total assets in the fund and its one-year return is 21.91%. This fund is ranked with 4-stars by rival Morningstar.

Loomis Sayles Mid Cap Growth A (LAGRX) keeps at least 80% of its assets invested in equities and its companies invested in must have market capitalizations within the range of the Russell Midcap Growth Index.  This one has a five year annualized return of 6.79% and the top ten holdings account for 25.24% of the total assets of the fund.  Its one-year return is 30.46%.  This fund is ranked with 3-stars by rival Morningstar.