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 funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all growth funds, then click here.
State Farm Growth (STFGX) seeks capital appreciation. It focuses on acquiring securities of companies with market capitalizations of at least $1.5 billion, but may invest in companies of all sizes. The majority of its assets are invested in common stocks and other equity securities. The growth fund returned 15.36% in the last one year period and has a five year annualized return of 2.37%.
The growth fund has a minimum initial investment of $250 and an expense ratio of 0.13% compared to a category average of 1.11%.
Goldman Sachs Growth Opportunities A (GGOAX) invests at least 90% of its assets in equity securities. The fund focuses on acquiring mid-cap stocks and looks at purchasing publicly traded domestic securities. Up to 25% of its assets may be invested in foreign securities, including those issued from emerging markets. The fund has a five year annualized return of 5.42%.
David M. Shell is the fund manager and he has managed this fund since 1999.
Marshall Mid-Cap Growth (MRMSX) seeks capital growth. It invests the majority of its assets in growth stocks of mid-cap companies. It focuses on purchasing common stocks issued by firms with market capitalizations corresponding to those included in the Russel Mid-Cap Growth index. The fund returned 29.61% in the last one year period.As of May 2010, this growth fund held 79 issues, with 4.57% of its total assets invested in Energy XXI (Bermuda) Ltd.
T. Rowe Price Mid-Cap Growth (RPMGX) invests at least 80% of its assets in a wide range of mid-cap companies. The fund focuses on acquiring common stocks of companies which have the potential for above-average growth. It is a no load fund and may also purchase futures and options and foreign securities.
The fund has a ten year annualized return of 5.94%.
USAA Capital Growth (USCGX) seeks capital appreciation. It primarily invests in equity securities and focuses on acquiring instruments which appear attractive from the global perspective. It may utilize all of its assets to purchase foreign securities. The fund returned 13.19% in the last one year period.
The growth fund has a minimum initial investment of $3,000 and an expense ratio of 1.26% compared to a category average of 1.53%.
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