When capital appreciation takes precedence over the need for regular income, growth funds could be the logical choice for investors. This category of funds usually invests in companies whose stocks are underpriced relative to their intrinsic value. Thus, investing in growth funds requires a long term approach to investing and a higher tolerance for risk. This is because growth stocks may experience more fluctuations than other fund classes. These risks are much lower than sector-specific funds and can be reduced using a conservative approach.
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.
Wells Fargo Advantage Growth (SGROX) seeks long-term capital growth. The fund invests in companies with the ability to grow revenues and earnings significantly. The majority of the fund’s assets are invested in equity securities. Not more than 25% of its assets may be used to purchase foreign securities. The growth mutual fund returned 33.67% in the last one year period.
Thomas Ognar is the fund manager and he has managed this growth mutual fund since 2002.
Reynolds Blue Chip Growth (RBCGX) invests the majority of its assets in common stocks of companies with the potential for superior growth. The companies selected must be renowned in their respective sectors and have a minimum market-cap of $1 billion. The growth mutual fund has a three year annualized return of 22.66%
The growth mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.80% compared to a category average of 1.31%.
Thrivent Mid Cap Growth A (LBMGX) seeks capital appreciation. At least 80% of its assets are invested in mid-cap companies. It focuses on mid-cap stocks similar to companies in the Russell Mid-cap Growth index or S&P MidCap 400/Citigroup Growth index. The growth mutual fund has a five year annualized return of 6.79%
Andrea J. Thomas is the fund manager and he has managed this growth mutual fund since 1997.
Virtus Strategic Growth A (PSTAX) invests at least 65% of its assets in stocks of large cap companies. These firms must have market capitalizations which lie within the range of the Russell 1000 Growth Index. It may also purchase stocks of large small and mid-cap companies. The growth mutual fund returned 20.92% in the last one year period.
As of February 2011, this growth mutual fund held 78 issues, with 3.18% of its total assets invested in Apple, Inc.
Invesco Van Kampen Mid Cap Growth A (VGRAX) seeks capital growth. It invests heavily in mid-cap growth companies. A large proportion of its assets are utilized to purchase equity securities such as common stocks. The growth mutual fund has a ten year annualized return of 7.56%.
The growth mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.24% compared to a category average of 1.42%.
To view the Zacks Rank and past performance of all growth mutual funds, then click here.