This large growth fund’s top holdings are Google Inc. (GOOG), Mastercard Incorporated (MA), Visa Inc. (V), Priceline.com Incorporated (PCLN) and Allergan, Inc. (AGN).
Vanguard U.S. Growth (VWUSX)
from The No-Load Fund Investor
Over the past three years, Vanguard U.S. Growth (VWUSX) outperformed its index peer (15.9% annualized, vs. 15.4%), annually. Prior to the last three years or so, U.S. Growth was a weak performer that had gone through several management teams. However, the fund’s fortunes finally turned for the better in October 2010, when Vanguard jettisoned one of the fund’s investment management teams and brought in teams from Wellington Management and Delaware Management, both of which joined William Blair & Company (an earlier component that survived the cut).
Just recently, this trio was joined by teams from Baillie Gifford Overseas and Jennison Associates, who formerly managed a Vanguard fund, Growth Equity, which merged with the U.S. Growth fund in February. Each of the fund’s five current management teams runs their sleeves independently of one another, subject to risk oversight from Vanguard. (This is a common structure for Vanguard’s actively managed stock funds.)
The U.S. Growth fund benefited in 2013 from stronger growth stock picks among Internet and specialty retailers, media corporations and even restaurants benefited from favorable economic and consumer trends. In financials, electronic payment corporations (e.g., MasterCard and Visa) performed especially well, as investors recognized the wider global use of credit cards as opposed to paper currencies.
As in Growth Index, the technology sector accounted for the largest percentage of assets: about 26%, vs. 27.8% in the index fund. U.S. Growth recently held 121 stocks, with the top 10 accounting for nearly 28% of assets.
The U.S. Growth fund has an expense ratio of 0.45%. Vanguard does not expect the merger of the fund formerly known as Growth Equity into U.S. Growth to cause taxable distributions for shareholders of the existing fund.
If you like the idea of a relatively aggressive, actively managed alternative to an index fund, go with U.S. Growth. If you like the idea of active management with slightly less risk, go with Morgan Growth.
Mark Salzinger, The No-Load Fund Investor, www.noloadfundinvestor.com, 800-706-6364, March 2014