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- RBC Capital Markets tracked long-only large-cap-fund holdings and analyzed the stocks they were most overweight.
- The top growth funds are crowded into the tech, internet, media, and telecom industries.
- The group’s performance struggled in the first quarter, but has picked up in Q2.
- RBC has compiled a list of the 10 so-called Gorillas of Growth that are the most heavily weighted in large-cap portfolios.
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The performance of the stocks most popular with growth investors lagged at the start of 2019, but has picked up in the second quarter of the year.
That’s according to RBC Capital Markets, which recently looked at the stock-level holdings of actively managed large-cap funds, which are slightly outperforming benchmarks this year.
The 149 growth funds analyzed by RBC are benchmarked to the Russell 1000 Growth Index. Of these funds, the most-popular overweights are referred to by the firm as "The Gorillas of Growth."
These Gorillas of Growth have outperformed since the end of 2010 despite two years of weak performance in 2014 and 2016. IT services and software companies account for five of the top six names, affirming RBC’s view that those industries remain over-owned industry. All but three of the companies on the list come from the tech, internet, media, or telecom industries.
The crowding in these industries might not change anytime soon, as even new additions to the list fall in the same categories: This was the first quarter that Netflix has ranked on the screen since tracking began in 2010.
Analysts from RBC highlighted Visa, PayPal, MasterCard, and Amazon as the names most at risk from tariffs within their industries.
Below are RBC’s 10 Gorillas of Growth, ranked in increasing order of the percentage of funds that hold them overweight.
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10. Nike
Markets Insider
Ticker: NKE
Industry: Textiles, Apparel & Luxury Goods
% Growth funds overweight: 38%
Change in # of growth funds own vs. 4Q2018: 4
2QTD relative return: -2.9%
Source: RBC Capital Markets
9. Netflix
Markets Insider
Ticker: NFLX
Industry: Entertainment
% Growth funds overweight: 40%
Change in # of growth funds own vs. 4Q2018: 5
2QTD relative return: 0.2%
Source: RBC Capital Markets
8. UnitedHealth Group
Markets Insider
Ticker: UNH
Industry: Healthcare providers & services
% Growth funds overweight: 43%
Change in # of growth funds own vs. 4Q2018: 1
2QTD relative return: –1.4%
Source: RBC Capital Markets
See the rest of the story at Business Insider
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Source: Business Insider – feedback@businessinsider.com (Carmen Reinicke)