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Current Environment Seems to Favor This Large-Growth Fund

David Kathman, CFA, Ph.D.

David Kathman: ASTON/Montag & Caldwell Growth (MCGFX) is a large-growth fund that has a pretty good long-term track record and a Morningstar Analyst Rating of Bronze, but it's mostly struggled to keep up with its large-growth peers since the 2008 financial crisis. The main reason for this underperformance is that it owns big, high-quality growth names that the managers feel are underpriced. That hasn't been a very good place to be in a low-interest-rate environment where lower-quality, riskier growth names have tended to be the best performers.

But this fund has historically tended to do pretty well in periods following stretches of underperformance. And with the Fed finally starting to raise interest rates, it seems like the market might be turning more in this fund's direction. It did actually perform very well in the second half of 2015 when it ranked in the top quartile of the large-growth category. Whether or not that continues in the short term, this is a nice, solid fund that shouldn't be judged on its three- and five-year results.