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This Growth Fund Brims With Wide-Moat Stocks

Silver-rated Morgan Stanley Institutional Advantage's focus on established companies has provided a relatively smooth ride.


Katie Reichart: Morgan Stanley Institutional Advantage receives a Morningstar Analyst Rating of Silver. The fund has been around for almost 10 years. It's run by Dennis Lynch and team, who have run other funds across the market cap spectrum for even longer.

The team is known for its growth approach. They look for companies that dominate their market niches and have enduring competitive advantages, whether brands, scale, or network effects. Unlike their other funds, this one focuses on more established companies and de-emphasizes industry disrupters that can up volatility. As a result, the fund tends to provide a smoother ride for investors, though one that's posted smaller gains than the team's other large-cap offering in growth-fueled market rallies.

Even so, the fund has amassed an impressive record. While just a month shy of its 10-year record, it's beaten the Russell 1000 Growth index by more than 1 percentage point annualized since inception. And it's held up fairly well in pullbacks.

This fund has a small asset base compared to its more aggressive large-growth sibling, Morgan Stanley Institutional Growth, so one drawback is that fees aren't overly compelling. But the team has shown that its stock-picking can still shine through.

Katie Rushkewicz Reichart does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.