Top 5 Growth Mutual Funds (Jan. 2011)

Investors with a relatively higher tolerance for risk as well as a longer investment horizon are ideally suited to invest in growth funds. This category of funds has capital growth as its primary goal but provides few if any dividend payouts to investors. It selects companies with the potential to deliver superior growth in revenue and earnings often achieving their goals by reinvesting profits into expansions and acquisitions. Such investments may experience higher volatility relative to value and blend funds, but still have a lower risk component compared to funds investing in specific sectors such as technology or real estate.

Below we will share with you 5 top rated growth mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Fidelity Growth Discovery (FDSVX) seeks capital growth. The fund focuses on acquiring common stocks. It selects companies after considering their potential to deliver significant growth over the long term. It utilizes fundamental analysis of the issuing companies as the basis of selecting stocks. The growth mutual fund has a five year annualized return of 4.31%.

The growth mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.75% compared to a category average of 1.32%.

T. Rowe Price New America Growth (PRWAX) invests at least 65% of its assets in domestic companies. The fund selects companies, regardless of their size, from sectors which have the highest growth potential. It may also purchase foreign securities, futures and options. The growth mutual fund returned 19.34% over the last one year period.

Joseph M. Milano is the fund manager and he has managed this growth mutual fund since 2002.

Wells Fargo Advantage Capital Growth (SLGIX) seeks capital appreciation over the long term. The fund invests the majority of its assets in large-cap companies. Not more than 25% of its assets are utilized to purchase foreign equity securities. It is a no load fund.

The growth mutual fund has a ten year annualized return of 2.39%.

BlackRock Focus Growth A (MDFOX) primarily invests in common stocks of 25 to 35 companies with above-average growth potential. It focuses on acquiring equity securities of mid-cap and large-cap companies. Not more than 20% of its assets are invested in foreign securities. The growth mutual fund returned 21.91% over the last one year period.

As of November 2010, this growth mutual fund held 34 issues, with 7.65% of its total assets invested in BlackRock Liquidity TempFund Instl.

HSBC Investor Growth A (HOTAX) seeks capital growth over the long term. The fund invests in domestic and foreign equity securities of growth-oriented companies. It normally invests in companies with market capitalizations exceeding $2 billion. The growth mutual fund has a five year annualized return of 4.71%.

The growth mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.20% compared to a category average of 1.32%.

To view the Zacks Rank and past performance of all growth mutual funds, then click here.

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