Slow Growth Stocks Haven't Stalled These Two Funds
Find out which large-cap funds shone last year despite an emphasis on blue chips.
Morningstar divides most stocks into eight categories, each of which defines a broad category of investment characteristics. For example, stocks in the slow growth category have shown slow revenue and earnings growth (typically less than the rate of GDP growth) over at least three years. By comparison, classic growth firms exhibit stronger growth in earnings and revenues and typically pay a dividend. While stocks from these categories generally lagged their cyclical and speculative counterparts from the March 9, 2009, market bottom onward, not all funds focused on these areas sat on the sidelines.
In a handful of steps, the Premium Screener can uncover funds that turned what appeared to be a disadvantage last year into an advantage and that sport other attractive qualities to boot. First, the screen zeros in on large-cap stock funds with more exposure to classic and slow growth firms than the S&P 500 Index, using Vanguard 500 Index Investor (VFINX) as a proxy. It's set to pull funds that placed within the top third of their respective categories last year, and in order to limit the list to long-term winners, it narrows the field to offerings with top-quartile category rankings for the trailing 10-year period with manager tenures of at least 10 years. Turnover is set below the category average in order to point to a longer-term focus on slower-growing stocks. Lastly, the field is limited to reasonably priced funds that are open to new investments of $25,000 or less.
As of Feb. 2, 2010, the screen turned up just two funds. To run it yourself, click here.
Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.