Loading...
 

Value Line’s Growth objective group is by far the largest group under review. It is broadly constructed on purpose, taking into consideration any fund that has a primary objective of capital growth. Weeded out are funds that follow more-specific mandates, such as capital growth by investing in small and mid-cap companies or sector-oriented funds. To fine-tune what is an extremely diverse grouping of funds, we use peer groups.

That said, why such a broad category? The main purpose is to put funds together that, by prospectus, are trying to do the same things. While it is important to view certain funds against smaller, similar groups, it is a mistake to take them completely out of the broader construct within which they operate. Investors should be keenly aware that a fund that is the best out of 20 or 30 specific peers may still be a laggard when compared to a broader group of competition. Unless such a fund is owned for a very specific reason, there would likely be better investment options.

Despite the objective’s title of Growth, this category can contain both growth- and value-oriented funds. In fact, there is a wide variety of funds here, spanning from the expected index funds all the way to focused funds that own just a handful of stocks. Managers can take any number of approaches to investing, too, including growth, value, growth at a reasonable price, socially focused, market-neutral, and tax-minimizing strategies, or, in some cases, a combination of these.

Over the long term, the Growth objective group has kept pace with the broader market, as measured by the S&P 500 Index. For the 10-year period ended December 31, 2012, the group had an annualized gain of 7.1%, while the S&P 500 also reported a return of 7.1%. For five years and three years, the group had annualized gains of 0.8% and 9.0%, respectively, while the S&P 500 reported increases of 1.6% and 10.9%, respectively. During the past year, the Growth objective group reported a return of 14.3%, compared to 16.0% for the S&P 500. The group has an average Risk Rank of 3, indicating an average level of risk.

One fund with a relatively strong year-to-date return through December 31, 2012 is Legg Mason Capital Management Opportunity Fund (LGOAX). This fund’s investment objective is long-term growth of capital. It seeks to achieve this goal by investing in securities, derivatives, and other financial instruments that, in management’s opinion, offer the best opportunity for long-term growth of capital.

The fund exercises a flexible strategy in the selection of investments, not limited to any one investment style or asset class. It may invest in the common stock of U.S. and foreign issuers, and in securities convertible into common stock and securities issued through private placements; preferred securities; warrants and rights; as well as mutual funds, closed end funds; exchange traded funds; real estate investment trusts; debt securities; as well as options, futures and other derivatives. As of December 31, 2012, the fund held about 92% of its assets in common stocks, 7% other, and about 1% in cash and equivalents. Also as of the same date, this fund’s top-10 holdings accounted for 36% of total assets.

Another fund with an excellent record for the 12 months ended December 31, 2012 is Fidelity Advisor Leveraged Company Stock Fund (FLSAX). This fund’s investment objective is capital appreciation. It pursues this goal by investing at least 80% of its assets in stocks. These stocks are primarily of leveraged companies, companies that issue lower-quality debt, and other companies with leveraged capital structures. The fund may also invest in lower-quality debt securities. It may invest in domestic and foreign issuers, and  either growth stocks, value stocks, or both.

The fund uses fundamental bottom-up research, seeking companies with strong financial conditions and industry positions, and positive market and economic conditions for the selected stocks to perform well in.
As of October 31, 2012, the fund held about 91% of its assets in equity securities, 1% bonds, and 8% cash and equivalents. As of the same date, the fund’s top-10 positions accounted for about 32% of assets.

A third fund with a very good return through the first three months of 2012 is Federated Kaufmann Large Cap Fund A (KLCAX). This fund’s investment objective is capital appreciation. Toward this goal, the fund's principal investment strategy is to primarily invest at least 80% of its assets in the common stocks of large companies. These are defined as companies that are in the top 75% of the market capitalization range of the Russell 1000 Index.  It may invest in both domestic and foreign issuers, and may invest up to 30% of the fund’s assets in foreign securities in both developed and emerging markets. Employing rigorous bottom-up fundamental analysis, the fund invests principally in growth-oriented equity securities of companies that are believed to generate better-than-expected sustainable growth of revenues and earnings. As of September 30, 2012, the fund held about 97% of its assets in equity securities and 3% in cash and equivalents. As of the same date, the fund’s top-10 positions accounted for 31% of assets

In the table below, we have listed 10 top-performing funds through December 31, 2012 that we follow in The Value Line Fund Advisor’s database.

10 Top Growth 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

Legg Mason Capital Management Opportunities A

LGOAX

40.69

9.26

11.99

17.91

  

Fairholme

FAIRX

35.81

5.19

4.70

8.90

2.39

Matthew 25

MXXVX

31.63

0.15

-0.86

10.69

11.08

Artisan Growth Opportunities

ARTRX

29.78

1.31

3.22

12.79

 

Fidelity Advisors Leveraged Company Stock A

FLSAX

29.31

4.12

6.46

14.61

1.18

Bright Rock Quality Large Cap

BQLIX

28.58

1.42

-1.09

5.52

  

Federated Kaufmann Large Cap A

KLCAX

26.07

2.39

5.86

12.75

6.12

Janus Forty A

JDCAX

23.78

0.70

0.46

7.60

-0.37

American Growth A

AMRAX

18.88

2.42

1.72

9.23

-2.21

Aquila Three Peaks Opportunity Growth A

ATGAX

24.06

2.41

3.90

11.60

1.26

Growth Objective Group

  

  

14.28

1.10

0.47

6.16

0.76

  

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