Touchstone Sands Select Growth
If you’re not as concerned with the income of dividends to hedge your bets, there are a number of high-growth funds out there that play the growth in big-name blue-chip stocks. The question, then, is which fund is right for your IRA or 401(k).
A large-cap growth fund that could be right for your portfolio is the Touchstone Sands Capital Select Growth (MUTF:PTSGX) mutual fund.
According to the prospectus, manager Frank Sands focuses the portfolio on picks with a market capitalization in excess of $25 billion, generally avoids companies that have a market capitalization of less than $2 billion. Current top holdings include names like Amazon.com (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Visa (NYSE:V).
This fund gets the elite five-star rating from Morningstar. The only knock against it is that it has a relatively steep 1.23% expense ratio — meaning you shave off that much from your annual returns, so the bar is set much higher for outperformance.
On the plus side? Sands has had zero problem getting his namesake fund to more than pay for itself. The five-year return is 8.5% and the 10-year return is 7.2% — meaning if you invested $10,000 in 2002, you would have about $20,000 via Touchstone Sands vs. about $15,000 from an S&P 500 index fund.
Sands has been running the show since 2000, and his long tenure and long history of beating the market is a big plus for investors. True, you’re not getting income from stocks like Amazon or Apple, but this mutual fund knows how to find the right growth investments to make it a highly profitable play for investors — even while relying on the relative stability of mega-cap blue chips like AAPL and AMZN.
Want a little more spice in your equity funds, but still reluctant to take on higher-risk investments? Look no further than the Vanguard Explorer Fund (MUTF:VEXPX). This mutual fund focuses on small-cap opportunities that can provide great growth over the long term.
This is an actively managed fund, so you’re putting your faith in the expertise of the Vanguard stock pickers here. But based on the track record of this funds and its managers, you can tap into market-beating performance for a very affordable advisory fee.
The 10-year return of Vanguard Explorer is roughly 6.5% annually — which would have turned $10,000 into about $18,000 since 2002, and significantly outperformed the S&P 500. The average return for the life of this fund is a very impressive 8.8% annually.
And the expense ratio is a very affordable 0.5%. This is 66% lower than the average expense ratio of funds with similar holdings, according to Vanguard’s research.
Small-cap investing is inherently more volatile than taking shelter in bonds or blue chips. However, the track record of Vanguard Explorer means this fund is worth a look even for those seeking lower volatility in their retirement investments.
Jeff Reeves is the editor of InvestorPlace.com. Write him at firstname.lastname@example.org, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.