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Mutual Fund Commentary

When capital appreciation over the long term takes precedence over dividend payouts, growth funds become a natural choice for investors. These funds focus on realizing an appreciable amount of capital growth by investing in stocks of firms whose value is projected to rise over the long term. However, a relatively higher tolerance to risk and the willingness to park funds for the longer term are necessary when investing in these securities. This is because they may experience relatively more fluctuations than other fund classes.

Below we will share with you 5 top rated growth mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all growth funds, investors can click here to see the complete list of funds.

Pyxis Premier Growth Equity A (HPEAX - MF report) seeks capital growth and income over the long term. It invests heavily in equity securities and focuses on those companies whose market capitalizations are above $2 billion. The fund may invest in a variety of derivatives and also in foreign securities. The growth mutual fund has a one year annualized return of 16.88%.

David B. Carlson is the fund manager and he has managed this growth mutual fund since 1996.

T. Rowe Price Growth Stock (PRGFX - MF report) invests a large share of its assets in common stocks of a wide range of growth-oriented companies. It focuses on those companies which have higher dividend paying capacity. The growth mutual fund has a one year annualized return of 13.10%.

As of September 2012, this growth mutual fund held 114 issues, with 12.17% of its total assets invested in Apple Inc.

JHFunds2 Blue Chip Growth 1 (JIBCX - MF report) seeks capital growth over the long term. It invests heavily in common stocks of growth-oriented large and mid-size blue chip companies. A maximum of 25% of its assets may be invested in convertible securities, preferred stocks and debt securities. The growth mutual fund has a one year annualized return of 12.20%.

The growth mutual fund has an expense ratio of 0.83% compared to a category average of 1.27%.

Frost Growth Equity A (FACEX - MF report) invests the majority of its assets in equity securities. It focuses on those companies which have the potential to earn higher revenues and earnings. It may also invest in domestic and foreign equity securities as well as American Depositary Receipts (ADRs). The growth mutual fund has a one year annualized return of 6.60%.

Alan Tarver is the fund manager and he has managed this growth mutual fund since 1981.

Hennessy Cornerstone Growth (HFCGX - MF report) seeks capital growth over the long term. It invests in common stocks of growth oriented companies. The fund selects 50 stocks using the Cornerstone Growth Strategy, which is its own quantitative formula. It invests 2% of the portfolio’s assets in each of these 50 stocks. The growth mutual fund has a one year annualized return of 24.17%.

The growth mutual fund has an expense ratio of 1.33% compared to a category average of 1.35%.

To view the Zacks Rank and past performance of all growth mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

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