For investors willing to forgo regular dividend payouts for long term capital appreciation, growth funds are a natural choice. By focusing on investing in companies whose value will continue to increase, it aims at reaping the maximum amount of capital gains. A long tem outlook and tolerance for a reasonable amount of risk are necessary when investing in these securities since they are relatively more volatile than other fund types. However, the risk involved in this case is much lower than sector funds which promise even higher gains. When using a conservative approach, growth funds are an even safer and less risky investment.
Below we will share with you 3 top rated growth funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all growth funds, then click here.
Van Kampen Equity Growth A (VEGAX) invests in large and medium sized companies which show the potential for above average growth. This growth fund invests in common and preferred stocks, convertible securities, futures and options. It invests 35% of its assets in foreign companies and up to 10% in the real estate sector. The fund returned 78.33% in the last one year.
Kristian Heugh is the fund manager and has managed this growth fund since 2006.
Ariel Appreciation Fund (CAAPX) seeks long term capital growth. It focuses on medium-sized companies with market capitalizations between $2.5 billion and $15 billion. The fund seeks out undervalued companies and may invest a small portion of its assets in foreign companies. The fund has a ten year annualized return of 7.14%.
The growth fund has a minimum initial investment of $1000 and an expense ratio of 1.19% compared to a category average of 1.38%.
ING Value Choice A (PAVAX) seeks investments in companies with a wide range of market capitalizations and concentrates on those which it thinks are undervalued. It may also lend up to a third of its assets on a short or long term basis. The fund returned 55.21% in 2009 and has a three year annualized return of 3.19%.
As of December 2009, this growth fund held 66 issues, with 8.76% of its total assets invested in ING Institutional Prime Money Market fund.
To view the Zacks Rank and past performance of all growth funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/