This month’s Mutual Fund First Cut seeks domestic large-cap growth stock funds that have performed well within their peer group over the last five years. Domestic large-cap stocks are a core asset allocation segment for most investors.

There are over 1,200 domestic large-cap growth stock funds in the AAII mutual fund universe. The screen first focused on consistent strong relative performance by requiring one-, three- and five-year return grades of C or better, calculated by comparing a fund’s performance to other funds in the same category. These filters excluded funds in the lowest 40th percentile ranking in their category, a performance grade of D or F. It is generally best to first focus on a fund category desired for your asset allocation then seek funds with strong relative performance, acceptable risk and low expenses within that category.

To eliminate funds with excessive risk used to achieve their performance, funds with a risk rank of F were excluded. The passing table lists the fund category risk index, which relates a fund’s volatility over the last three years to that of other large-cap growth funds.

Taking costs into account, a grade of C or better was required for the fund’s expense ratio; funds that charge a sales load were excluded. Mutual funds designated as institutional were excluded. Funds with special share classes or designated as leveraged or inverse were also excluded. Finally, funds with a minimum initial investment of $50,000 or less made the First Cut. In total, 23 funds passed all of the filters and they are ranked by their five-year return.

Large-Cap Growth Funds With Consistent Strong Relative Performance
(Ranked by Five-Year Return)

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