After six years of underperformance, many observers believe that large-cap growth stocks are poised to make a comeback. With rising energy prices, tightening credit, and an expected slowdown in the global economy, investors may look to move into large, stable, blue-chip companies that have traditionally provided consistent returns and resiliency. Moreover, small-cap stocks, which have outpaced larger ones in recent years, may have reached fuller valuations, rendering the large-cap sector more attractive.
One of the best performing large-cap growth portfolios in recent years, the $489 million Marsico 21st Century Fund (MXXIX), typically holds between 35 and 50 stocks. Over the five-year period through February 28, this portfolio gained 11.85% annualized, making it the best large-cap growth vehicle over that period. By comparison, the S&P/Citigroup 500 Growth index slipped 1.51% during that time.
As of January 31, the bulk of the fund’s assets (69%) were occupied by financials, consumer cyclicals, and industrial holdings. The fund’s top five holdings as of that date were Amylin Pharmaceuticals (AMLN), Burlington Northern Santa Fe (BNI), Las Vegas Sands (LVS), Station Casinos (STN), and Wynn Resorts (WYNN). Manager Corydon Gilchrist uses an intensive fundamental research process along with an assessment of the macroeconomic environment to construct the portfolio.
Another top performer in this asset class, the $171 million Gartmore U.S. Growth Leaders/IS (GXXIX), seeks companies whose earnings are expected to grow faster than those of other companies in the market. Portfolio managers Christopher Baggini and Douglas Burtnick currently have more than one-third of the fund’s assets in the information technology sector (34.2%), followed by consumer discretionary (18.3%), financials (12.8%), industrials (12.5%), and health care (12.0%).
The fund is concentrated but still has a very high turnover rate for the recent 12-month period