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.
T. Rowe Price Growth Stock (PRGFX - MF report) seeks long-term capital growth. It invests a large share of its assets in common stocks of a wide range of growth-oriented companies. The fund focuses on investing in stocks of large-cap domestic as well as foreign firms. The growth mutual fund has a one year annualized return of 35.42%.
The fund has an expense ratio of 0.7% as compared to category average of 1.23%.
RS Growth A (RSGRX - MF report) invests primarily in securities issued by companies that it classifies as those with large capitalizations. According to its management team, such companies must have a market capitalization not lower than $1 billion and not higher than that of the largest company which is part of the Russell 1000 Index. The growth mutual fund has a one year annualized return of 38.58%.
Stephen Bishop is the fund manager and has managed the fund since 2009.
Lord Abbett Growth Leaders A (LGLAX - MF report) invests a large share of its assets in equity securities of growth oriented companies. The fund may invest in both domestic and foreign equity securities. A minimum of half of its net assets must be invested in companies which are part of the Russell 1000 Index. It may invest the other part in mid and small-cap companies. The growth mutual fund has a one year annualized return of 43.14%.
As of September 2013, this growth mutual fund held 101 issues, with 4.02% of its total assets invested in Facebook Inc.
Putnam Growth Opportunities A (POGAX - MF report) seeks capital growth. It primarily invests in common stocks of domestic growth-oriented companies. These companies’ earnings may outpace the earnings of its peers and thereby drive stocks. The growth mutual fund has a one year annualized return of 32.14%.
The fund has an expense ratio of 1.13% as compared to category average of 1.23%.
Franklin Flex Cap Growth A seeks capital growth by primarily investing in common stocks of companies having a significant growth potential. It may invest in companies regardless of their market capitalization and location The growth mutual fund has a one year annualized return of 33.37%.
Conrad B. Herrmann is the fund manager and has managed this growth mutual fund since 1993.
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.
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