Top Fund Bets on Wal-Mart, McDonald's

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The T. Rowe Price Growth Stock Fund(PRGFX Quote), the only equity fund with more than $10 billion in assets that generated a return last quarter, dumped health-care stocks and expanded its position in consumer-goods companies.

The mutual fund, managed by Robert Bartolo at T. Rowe Price Group(TROW Quote), gained 0.21% during the first quarter, when the S&P 500 Index dropped 10%. The fund has lost 6.9%, on average, in the past three years, narrowly outperforming the benchmark, which fell 8.5% a year.

Bartolo took advantage of rapidly shifting markets to reduce the mutual fund's health care weighting by 4.7%, according to data compiled by Bloomberg. He added 5% of the fund's assets to stocks that sell goods to consumers, including new positions in Wal-Mart Stores (WMT Quote), McDonald's (MCD Quote) and Dollar Tree (DLTR Quote).

The climate for health care stocks has been uncertain as the prospect of sweeping health care legislation from Congress looms. The policies will aim to save billions of dollars in health care costs, which will likely reduce revenue at insurers like Aetna (AET Quote) and Humana (HUM Quote). The fund eliminated its stakes in both stocks, which are down by more than 10% this year.

Investors trying to get ahead of the economic curve have been betting on consumer stocks this year in the hopes that spending will soon recover. Consumer stocks make up almost a quarter of the fund's assets.

The fund bought 4.3 million shares of Wal-Mart, 2 million shares of McDonald's and 1.9 million Dollar Tree shares during the quarter. Wal-Mart and McDonald's stocks have lost 9% and 11% of their value this year, respectively. Dollar Tree has gained 3.3%.