So far this year, the overall market, at least as
gauged by the S&P 500 index, has gained around 5%.
However, many mutual funds that focus on stocks with
strong growth prospects have handily outperformed the S&P.
Here are three such funds that have not only chalked
up 49% to 74% gains so far this year, they have averaged 35% to 37%
annual returns over the past three years, more than double the S&P’s
performance.
What’s more, you don’t have to be rich to buy them.
Two have no minimum initial purchase requirements and the third
requires only $2.000 to get started. Also, all three are no-load
funds, meaning there are no sales commissions. Here’s the list.
Baillie Gifford US Equity Growth
ticker (BGGSX): A December 2016 IPO, Baillie currently holds 42
stocks that in its view have exceptional long-term growth outlooks.
In fact, nine of its top 10 holdings have been in its portfolio
since 2017, and the newest pick in that group has been in the
portfolio more than two years. Its three biggest holdings, as of
June 30, were Amazon.com (AMZN), Shopify (SHOP), and Tesla (TSLA).
Baillie has returned 72% year-to-date and averaged 37% annually over
the past three years. Annual portfolio turnover is only 18%. There
is no minimum initial investment requirement.
Baron Partners Retail
(BPTRX): Even more focused than Baillie, Baron held only 27 stocks
as of June 30. Talk about “buy and hold,” six of its top-10 holdings
have been in the portfolio longer than 10 years, and those top 10
holdings comprise 96% of its total portfolio. Its annual portfolio
turnover is only 8%. As of June 30, its three biggest holdings were
Tesla, which the fund has held for over six years, CoStar Group
(CSGP), an information provider to the commercial real estate
industry (bought in 2005), and IDEXX Laboratories (IDXX), which
produces products for the veterinary, livestock, and poultry
industries. Baron Partners has returned 74% year-to-date and
averaged 35% annual returns over three years. Baron requires a
$2,000 minimum initial investment.
Delaware Small Cap Growth
(DSGGX): As its name implies, unlike Baillie and Baron Partners that
hold mostly large growth stock plays, Delaware focuses on smaller
firms, but still with strong growth outlooks. Also, unlike Baillie
and Baron Partners, which are “buy and hold” players, Delaware turns
over its entire portfolio (currently 38 stocks) more than once a
year (139% turnover ratio). As of July 31, biggest holdings were
outdoor recreational products maker YETI Holdings (YETI), back
office software maker Bill.com Holdings (BILL), and communications
software producer Bandwidth Inc. (BAND). Delaware has returned 49%
year-to-date and averaged 35% annual returns over three years.
Delaware requires no minimum initial investment.
Given their low turnover rates and remarkable
returns, if you don’t want to buy the funds, both Baillie Gifford
and Baron Partners would be good resources for individual stock
investment ideas.
As usual, past performance doesn’t necessarily
predict future returns. Do your due diligence. The more you know
about your investments, the better your returns. All return data
quoted was as of September 18. Although two of the funds were
labeled “institutional,” all appeared to be available to individual
investors when I ran test transactions
last week.
All
fund data courtesy of Morningstar (www.morningstar.com).
9/20/20
