Daily Screen: Large-Cap Growth Fund Winners

Until last quarter, large-cap growth funds were king of the hill.

Today the Daily Screen turns its attention to the fund category that has lorded over just about every other in recent years. Over the past two years, managers of many big-cap funds have loaded up on massive tech titans and ridden them to fat returns. The average large-cap growth fund boasts a tech weighting of more than 40% and has averaged 34% returns in each of the past two years, compared with 19.7% returns for the average S&P 500 index fund, according to Lipper.

Growth funds, as opposed to lower-octane value funds, typically focus on fast-growing companies that often sport steep price-to-earnings ratios, like networking titan Cisco Systems (CSCO).

Investors have noticed these returns, routinely stuffing billions into the category on a monthly basis. At the end of September there was about $575 billion invested in big-cap growth funds. That's more than any other flavor of stock fund.

But when tech stocks hit some bumps last quarter, large-cap growth funds followed suit. On average, they lost 0.5% for the quarter. That's not a big deal, but some investors might chafe after such a solid run.

As usual, we've screened the category for funds that beat their average peer over the past one- and three-year periods, according to Morningstar. The first chart lists the top 10, ranked by one-year return. Then check out the second chart, which gives the 10 stocks with the biggest weightings in those top-10 funds.

The list of top picks is, shall we say, tech heavy. A combined portfolio of the top-10 funds would have nearly 65 cents of every dollar invested in tech stocks, and the funds' top-nine combined picks are all tech stocks. No. 1 is network shop JDS Uniphase (JDSU), owned by every top large-cap growth fund as of their most recent portfolio reports. After an 836% return last year, the stock is up 8.6% since Jan. 1.

One indication that there may be some truth to the market's recent value- and financial-stock fetish is Citigroup's (C) toehold at No. 10. After a 70% gain last year, the financial behemoth is up 37% so far this year.

Leading Large-Cap Growth Funds These funds have beaten their peers and the S&P 500 over the past 1- and 3-year periods.
Fund	1-Year Return	3-Year Annualized
(BFOCX)Berkshire Focus	150.1%	83.6%
(PBHLX)PBHG Large Cap Growth	96.3	38.5
(PLCPX)PBHG Large Cap 20	93.7	55.6
(SGRTX)Strong Growth 20	88.2	45.9
(TAGAX)Touchstone Aggressive Growth	81.4	29.3
(TGVFX)Touchstone Growth/Value	73.5	35.7
(SGROX)Strong Growth	72.7	32.6
Chesapeake Core Growth	65.9	28.9
(RIGAX)Reserve Informed Investors Growth	64.2	33.9
(IPSMX)IPS Millennium	63	44.4
S&P 500	12.5	15.5
Source: Morningstar. Performance figures through Oct. 3

Under the Hood The stocks with the biggest weighting in the combined portfolios of the funds listed above.
Stock	Weighting in Top-10 Funds	Number of Top-10 Funds Owning the Stock
JDS Uniphase (JDSU)	4.9%	10
Cisco Systems(CSCO)	3.3	8
Oracle(ORCL)	2.8	7
Sun Microsystems(SUNW)	2.7	8
Broadcom(BRCM)	2.7	7
Juniper Networks(JNPR)	2.5	6
Nortel Networks(NT)	2.5	6
Veritas Software(VRTS)	2.1	8
SDL(SDLI)	1.9	7
Citigroup(C)	1.8	6
Source: Morningstar. Holdings are as of most recent portfolio report.

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