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3 Gold-Rated Large-Growth Funds

The strategies--all open to new investors--differ in what they’re trying to do, and investors should understand before choosing.

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Alec Lucas: The large-growth Morningstar Category has been the best-performing asset class within domestic equity mutual funds over the past decade through September 2019. While investors shouldn’t count on a repeat performance over the next decade, there are three large-growth strategies currently open to new investors that carry Morningstar Analyst Ratings of Gold and should provide superior long-term results. The strategies differ in what they’re trying to do and understanding those differences should help investors select the right one for them.

T. Rowe Price Blue Chip Growth (TRBCX) is the only single manager fund in the group. Larry Puglia launched the strategy in 1993 and has led it through multiple market cycles. At more than $100 billion in assets, the strategy’s size presents a challenge, but it is one that Puglia, drawing on T. Rowe’s well-regarded analyst bench, has navigated well. He has consistently invested in 120 to 140 large- and mega-cap stocks throughout his tenure, even as the strategy has grown. That’s kept the portfolio fairly diversified, but concentration in individual names can be significant. In September 2018, for example, the fund’s position in Amazon.com (AMZN) topped out at 11.45% of assets, nearly double the stock’s weighting in the Russell 1000 Growth Index at the time. Puglia’s highest-conviction picks have tended to work out, though, and outperformance has been consistent. The biggest risk here is in choosing the right person to succeed Puglia, who is in his late 50s. Yet, T. Rowe Price’s track record in handling such transitions breeds confidence.

Alec Lucas has a position in the following securities mentioned above: POGRX. Find out about Morningstar’s editorial policies.

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