The Daily Screen: The Best Large-Cap Growth Funds

Big-cap growth funds rode tech stocks to solid gains last year, but this year both are headed in the opposite direction.

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These funds typically buy stocks of large companies that are growing their earnings faster than their peers and/or the market. As you might imagine, this approach often leads to big bets on pricey stocks in sectors like technology and telecommunications. At the end of October, the average big-cap growth fund had 43% of its money invested in tech stocks, according to Morningstar.

Those bets helped the average big-cap growth fund post a 39.8% gain last year. But now that the tech-laden Nasdaq Composite is down 44% from its March 10 peak, it's understandable that the average large-cap growth fund is underwater to the tune of 9.2% since Jan. 1.

Big-Cap Blues Large-cap growth funds have underperformed the broader market this year
	Avg. Large-Cap Growth fund	S&P 500
YTD Return	-9.2%	-5.3%
1-Year Return	-2.3	-2.8
5-Year Return	19.1	19.3
10-Year Return	17.1	18.0
Source: Morningstar. Annualized performance figures through Dec. 6.

In fact, it's a bit surprising that the losses aren't worse, given the tech sector's bloodbath this year. Since this is the biggest of the U.S. stock fund categories in terms of assets, it's hard to believe that most investors don't already have enough big-cap growth exposure. But if you're shopping for a fund, we've done some legwork for you. We screened the 376-fund category for those funds that beat their average peer over the last one- and three-year periods, according to Morningstar. Here's a top-10 list ranked by one-year returns.

Leading Large-Cap Growth Funds These funds have topped their peers over the past one- and three-year periods
Fund	1-Year Return	3-Year Annualized
(SHRAX)Smith Barney Aggressive Growth A	37.6%	37.5%
(BFOCX)Berkshire Focus	34.3	68.6
(PBHLX)PBHG Large Cap Growth	25.5	31.5
(JENSX)Jensen	24.8	18.3
(TGVFX)Touchstone Growth/Value A	22.9	33.3
(FDFFX)Fidelity Retirement Growth	21.6	27.0
(WOGSX)White Oak Growth Stock	19.7	31.7
(AGTHX)Growth Fund of America	19.7	28.5
(CHCGX)Chesapeake Core Growth	19.4	27.0
(TAGAX)Touchstone Aggressive Growth	12.3	27.2
Avg. Large-Cap Growth fund	-2.3	17.9
S&P 500	-2.8	13.3
Source: Morningstar. Annualized performance figures through Dec. 6

We've also screened these 10 leading funds' portfolios to see what stocks they're betting on. But let's start with the funds.

By and large it's a tech-heavy list. At first glance you'll notice a trio of firms known for their tech-stock picking skills: Fidelity ((FDFFX)Fidelity Retirement Growth), Oak Associates ((WOGSX)White Oak Growth Stock) and PBHG
((PBHLX)PBHG Large Cap Growth). These funds aren't for timid investors, but they've held up well during this tough year. Since Jan. 1, all three funds are in the black.

It's not too surprising that two broker-sold Touchstone funds made the list. That's because (TGVFX)Touchstone Growth/Value and (TAGAX)Touchstone Aggressive Growth both have Frank Mastrapasqua at the helm and share several of the same holdings, like software shop Oracle(ORCL), server kingpin Sun Microsystems(SUNW) and semiconductor concern Broadcom(BRCM).

The broker-sold (AGTHX)Growth Fund of America made the list, proving that big funds aren't necessarily sluggish. The $39.4 billion fund is one of the 10 largest funds in the nation, but its management team has kept it ahead of its peers with lower volatility as well.

If you're looking for a fund that's been less volatile than its peers, check out our chart-topper. Richard Freeman's low-turnover style helped broker-sold (SHRAX)Smith Barney Aggressive Growth hit fewer bumps than its average competitor, without hurting returns.

If you're looking for a no-load fund that has also beaten its peers with less volatility, check out (TGCNX)TCW Galileo Select Equity and (NOEQX)Northern Select Equity. If you're a die-hard index-fund investor, look at (VIGRX)Vanguard Growth Index.

If there was any doubt about these funds' taste for tech stocks, a look at their cumulative top-10 picks should lay that to rest. The vast majority of their faves have tech labels, leading off with chipmaker Intel(INTC), networking heavyweight Cisco Systems(CSCO) and data storage shop EMC(EMC). An equally weighted portfolio of these 10 stocks would be up more than 40% this year, though that figure is skewed by networker Ciena's(CIEN) 232% gain since Jan. 1.

If we pull out Ciena, the other nine stocks are up more than 17% this year, on average.

Under the Hood The stocks with the biggest weighting in the combined portfolios of the above 10 funds
Stock	Weighting in Top-10 Funds	Number of Top-10 Funds Owning the Stock
Intel(INTC)	2.3%	8
Cisco Systems(CSCO)	2.0	7
EMC(EMC)	2.0	5
JDS Uniphase(JDSU)	1.8	6
Corning(GLW)	1.8	7
Sun Microsystems(SUNW)	1.7	5
Ciena(CIEN)	1.4	4
Pfizer(PFE)	1.4	6
PMC Sierra(PMCS)	1.4	5
Texas Instruments(TXN)	1.4	5
Source: Morningstar. Holdings as of funds' most recent portfolio reports.

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