Two Growth Funds That Shrugged Off the Poor Decade
The past 10 years knocked many large-growth funds down for the count, but these two came out swinging.
Large-growth funds' returns haven't looked bad in the past year, but their 10-year results are still downright ugly. The group is down almost 2% annualized for the decade versus large value and large blend's respective 3% and 1% gains. That's because large growth suffered more than other big-cap funds during the decade's two bear markets and the 10-year period now excludes large-growth stocks' late-1990s' glory days.
Some funds deftly navigated the decade, though. You can find them in just a few steps with the Premium Screener. To begin, focus on reasonably priced large-growth funds that are open to new investment. Next, set the screen to pull funds that gained at least 3% annualized, or more than the typical large-value fund, over the decade. Also limit the field to managers with tenures of 10 years or more to ensure current management is responsible for the performance.
Lastly, screen for funds with a Best Fit Index R-squared of 80 or above to help eliminate funds that haven't stayed firmly rooted in large-growth territory. (Morningstar designates the Best Fit Index as the one that shows the highest correlation with a fund over the most recent 36 months, and R-squared measures the percentage of a fund's movements explained by the movements of this index, with 100 indicating that they're perfectly in sync.)
Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.