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Funds in Value Line’s Growth/Income objective group place equal emphasis on capital growth and current income, or growth of income, mainly through investments in common stocks. Although this balanced description may seem like a fine line of distinction from a fund that seeks capital appreciation with a secondary objective of income, or a fund that seeks income with a secondary objective of capital growth, it indicates an important difference. Funds in the Growth objective group and the Income objective group both have specific first-tier goals—Growth/Income funds, meanwhile, are, in some ways, the midpoint between the other two. 

Options range from focus funds, which hold only a small number of stocks, to broadly diversified funds. There are funds that take a growth-oriented approach and those that hone in on value investments. Size is another factor that often comes into play, with funds available that tend to focus on select areas of the market-cap spectrum. Note, however, that small-cap and mid-cap funds tend to reside in the Small Cap objective group.

There are also some thematic funds in this objective group, for example several socially responsible funds make an appearance here. In the end, there are a large number of options in the Growth/Income objective group, so investors need to ensure that they take the time to fully understand what the funds they are examining actually do to achieve their stated goals.

Over the long term, the Growth/Income objective group has been a decent performer relative to the broader market, as measured by the S&P 500 Index. For the 10-year period ended September 28, 2012, the group had an annualized gain of 7.2%, while the S&P 500 Index reported a gain of 8.0%. For five years and three years, the group had reported a neutral 0.0% and an annualized gain of 10.6%, respectively, while the Index reported advances of 1.0% and 13.2%, respectively. During the one-year period ended September 28, 2012, the Growth/Income objective group reported a return of 26.3%, compared to a return of 30.2% for the S&P. The group has an average Risk Rank of 3, indicating that funds in this group might appeal to most investors.

Year to date through September 28, 2012, the Growth/Income objective group has been outperformed by the broader market, reporting a gain 13.6% compared to a gain of 16.4% for the S&P 500 Index. 

One fund with a relatively high year-to-date return through the year ended September 28, 2012 is Goldman Sachs Growth & Income Fund A  (GSGRX). The fund's investment objective is long-term growth of capital and growth of income. To achieve its objective, the fund invests at least 65% of its assets in equity investments that management considers to have favorable prospects for capital appreciation and/or dividend paying ability. The fund may invest in U.S. securities, including preferred and convertible securities. It may also invest up to 25% of its assets in foreign securities, including those of emerging market countries. As of September 28, 2012, the fund had 98% of its assets in U.S. common stocks and 2% in non-U.S. stocks.

Another fund with a very good year-to-date return is Dodge & Cox Stock Fund (DODGX). The fund seeks long-term growth and income. A secondary objective is to achieve reasonable current income. Management invests at least 80% of its assets in common stocks. The fund may also purchase preferred stocks and debt securities that are convertible into common stocks. It can also have up to 20% of its assets in securities of non-U.S. issuers that are traded in the United States.

The fund invests primarily in companies that appear to be temporarily undervalued by the market but have a favorable outlook for long-term growth. Management focuses on the underlying financial condition and prospects of individual companies, including future earnings, cash flow, and dividends. Other factors, including financial strength, competitive advantage, quality of the business franchise, and competence of a company’s management are also used to help select individual securities. The fund invests primarily in medium-to-large well established companies.

A third fund with a very good year-to-date return is Vanguard Growth and Income Fund (VQNPX). The fund seeks to provide a total return, capital appreciation plus dividend income, greater than the return of the Standard & Poor’s 500 Index. Management invests at least 65%, and typically more than 90%, of the fund’s assets in stocks included in the S&P 500 Index. Most of the stocks held by the fund provide dividend income as well as the potential for capital appreciation. The fund seeks companies with strong balance sheets, higher dividend yields, and positive earnings surprises.

In the table below, we have listed 10 top-performing funds through September 28, 2012 that we follow in our Fund Advisor database.

 

10 Top Growth/Income Funds Performance

 

Fund Name

Ticker

% Year-to-date

Total Return

% 1 Month

Total

Return

% 3

Month

Total

Return

% 6 Month

Total

Return

% 5 Year

Total

Return

Annualized

TCW Dividend Focused

TGDFX

19.40

2.42

8.47

4.80

-0.34

JPMorgan US Research Equity Plus A

  

JEPAX

18.87

2.34

8.20

3.58

 

Fidelity Adv Mega Cap Stock A

FGTAX

18.97

3.21

8.20

3.70

 

Goldman Sachs Growth & Income A

GSGRX

18.72

4.24

8.13

4.59

-2.01

JP Morgan Growth & Income A

VGRIX

18.55

3.13

7.09

4.20

-0.14

Dodge & Cox Stock

DODGX

18.63

3.01

8.03

4.72

-1.76

ING Core Equity Research A

AAGIX

18.17

2.58

8.36

3.01

0.88

Ridgeworth Large

Cap Core Equity

A

CFVIX

18.23

2.30

7.24

1.21

-1.83

Fidelity Adv Growth & Income A

FGIRX

17.73

3.06

7.45

3.90

-0.06

Vanguard Growth & Income

VQNPX

17.14

2.40

6.30

3.50

-0.23

Growth/Income Objective Group

  

13.65

2.32

5.88

2.07

0.01

  

At the time of this article's writing, the author did not have positions in any of the companies mentioned.