This Large-Growth Fund Is Worth Watching

Connor Young: American Beacon SGA Global Growth features a seasoned management team and is on our radar. Comanagers George Fraise, Gordon Marchand, and Rob Rohn of subadvisor Sustainable Growth Advisors focus on established large-cap firms they believe have strong levels of cash flow available to shareholders--a conservative variant of free cash flow.

The three have overseen this fund since its December 2010 inception, and they've built a solid long-term record deploying similar stock-picking techniques at John Hancock U.S. Global Leaders Growth. The managers here invest with conviction, typically stashing one third of the portfolio's assets in its top 10 holdings. They pay little attention to the MSCI ACWI Index; notably, the fund tends to have a heavy emerging-markets stake.

Since its inception, through August 2018, the fund beat the index by more than 3 percentage points annually. Its above-average emerging markets exposure has resulted in higher volatility than the bogey, but the fund has still outperformed on a risk-adjusted basis due to management’s quality focus. Fees are above average relative to peers but have come down as assets have grown. We think the fund is worth watching.