Today we're poking through the large-cap blend category -- a good place to shop for a core stock fund that's a little country and a little rock 'n' roll.
As you might imagine, these funds' portfolios typically blend growth and value stocks . Growth stocks are those of companies growing their earnings quickly. They tend to have higher valued shares -- they often hail from high-octane sectors like technology. Value stocks, on the other hand, are often slow but steady growers, whose stocks look cheap relative to their industry peers and the market. Financial services is a traditional value-stock sector.
This mix of aggressive and more moderate investments can make these funds a good core holding for a broad range of investors. They typically perform similarly to the market, gaining ground with growth stocks, but not tumbling as far as they do in years like this one. That somewhat steady-Eddie DNA can give your portfolio a firm foundation.
Since these funds tend to get a fat portion of investors' portfolios, there's no shortage of these funds out there. In fact, on Sept. 30 there were more than 470, according to
. To winnow the field, we've screened the category to rule out funds that trailed their average peer over the last one- and three-year periods. Here's the top 10, ranked by their one-year returns.
You might want to think long and hard before buying shares of the fund at the top of our list, broker-sold
Waddell & Reed Accumulative fund. Antonio Intagliata has held the reins since 1979 -- a stunning tenure these days. But his style of sharp sector switches has led to significant volatility and low tax-efficiency over the years. Neither trait is enviable for a core holding.
It's not too surprising to see two
funds on our list since the giant broker-sold Boston fund shop's signature investment style is the measured GARP style -- one of the fund industry's most tired acronyms, standing "growth at a reasonable price."
MFS Core Growth manager Stephen Pesek has demonstrated a taste for tech -- at the end of August he had 41% of the fund in tech stocks. Maura Shaughnessy has taken a more diversified approach with
MFS Capital Opportunities, scouting out growing companies that aren't selling at thin-air valuations.
That said, Shaughnessy has an appetite for telecommunications stocks and she's probably best known for running the solid
MFS Utilities fund. For an idea of how Shaughnessy invests, check out this
10 Questions interview.
Most of these funds managed to top their peers by maintaining a significant footing in the tech sector, which lorded over other industry sectors prior to this year's selloff. Even
John Hancock Large Cap Value, whose name might imply an aversion to tech, had 34.7% of its assets in tech stocks on Sept. 30. Manager Tim Quinlisk's growth/value blend might make this broker-sold fund an intriguing option -- check out his
10 Questions interview for more on his style.
This shows in a glance at the cumulative top 10 holdings of the funds on our list. There you'll find a whopping seven tech stocks, including bellwethers
If you're looking for a more value-oriented fund in this category you might consider the no-load
T. Rowe Price Blue Chip Growth
. Yes, "growth" is in the fund's name, but manager Larry Puglia's price-conscious approach among household names has helped the fund achieve solid returns with less volatility than its peers -- the fund made the cut but it's 15.2% one-year return didn't crack the top 10.
You also might consider the
Vanguard 500 Index
fund, which belongs to the large-cap blend clan. The fund's tax-efficient, passive approach might be a solid fit for many investors or a good compliment to a more aggressive actively managed fund.