Large-cap growth funds have cooled off, but they haven't exactly gone cold.
zeroes in on the largest U.S. stock fund category with more than $530 billion -- more than twice the amount of cash invested in
index funds. By and large, these funds buy the stocks of big, well-known companies that are growing their earnings at a faster clip than their peers and/or the market.
Big-cap growth funds have ridden an average 40% tech-stock bet to outsize returns in recent years. In 1999, for instance, the average large-cap growth fund posted a 39.8% return, compared to 21% for the S&P 500, according to
Though their sizable tech bets have dragged these funds down this year, they haven't suffered too badly, relative to the S&P 500, which is underwater, too.
If you're looking for a solid large-cap growth fund, we've sifted the category for funds that beat their average peer over the past one- and three-year periods. We've also screened those leading funds' holdings to figure out what stocks drove their returns. But first the funds, here are our top-10 outperformers, ranked by their one-year returns.
Let's just say we're looking at a tech-heavy list. These funds average a whopping 57% tech-stock weighting. All of these funds -- many of which follow a focused strategy with just 20 or so holdings -- take an even more aggressive stance than most of their competitors.
It's probably no mistake that the list includes funds from
Fidelity Retirement Growth and
Fidelity Growth Company),
PBHG Large Cap Growth and
PBHG Large Cap 20) and
White Oak Growth Stock), three firms known for their acumen at picking tech stocks.
In addition to the funds on our list, there are some funds that earn lower risk scores from Morningstar that still manage to beat their peers. If you work with a broker, for instance, you might look at
MFS Strategic Growth or
MFS Massachusetts Growth Stock.
Do-it-yourselfers might consider some lower-risk no-load funds that still beat their peers like
TCW Galileo Select Equity or
Northern Select Equity. If you're an index investor, you might consider
Vanguard Growth Index.
If you needed any confirmation of these funds' big appetite for tech stocks, just look at the cumulative top-10 holdings of the leading 10 funds. All 10 are tech stocks with a heavy emphasis on networkers like top-two holdings
This list further illustrates growth managers'
movement away from tech bellwethers that rely heavily on PC sales like
. Neither cracks the top 10, with these managers favoring stocks of companies that rely more heavily on the growth of the Internet and the buildout of the world's communications networks, like
If these companies are New Tech and the PC-reliant types are Old Tech, score this round to the New Tech types.