Invesco Blue Chip Growth loses some of its luster

Fund profile

November 21, 1999|By MORNINGSTAR

Invesco Blue Chip Growth Fund is shining in 1999, but not too brightly.

Although this fund was rewarded with a top-tier performance in 1998 for betting on the market's biggest players, such concentration has not yielded much of a payoff so far in 1999.

The market broadened in the second quarter, volatility followed, and even the biggest technology names suffered. As a result, this concentrated fund has slid into the second quartile among its large-growth peers for the year to date through Oct. 18.

That large-cap focus is a result of lead manager Trent May's division of the fund into core and noncore investments.

For core holdings -- usually about two-thirds or more of the portfolio -- he looks for megacaps with market dominance in their fields. It's these core holdings that give the fund one of the largest median market caps in Morningstar's database.

With the balance of the portfolio, May frequently buys small companies that he considers up-and-comers.

This strategy has led May to dedicate a hefty stake of assets to health care and technology stocks. The health care stake has caused the fund some pain in 1999, as big drug companies have tumbled due to concerns about Medicare reforms.

Still, May is sticking with a health care overweight as he thinks the industry will grow as the population ages. In fact, he bolstered his drug stake as stock prices fell. He also added MedImmune to his noncore holdings, because he sees it as an up-and-comer in the biotech area.

As for the tech stake, May boosted his weighting in AOL to about 6.25 percent of assets. Recently, that move has proved to be a good one, as the online giant's stock has delivered strong gains.

Despite its recent bumps, this portfolio's long-term results remain well above average during May's tenure. That gives the fund appeal, but its concentrated style might not please everyone.

Invesco Blue Chip Growth

Fund managers: Brent May and Doug McEldowney

Largest investment sector: Technology

Style: The fund's median investment is in growth stocks of companies with large market capitalizations.

Total returns as of 11/12/99

Year-to-date: 25.70 percent

One year: 43.35 percent

Three-year annualized: 30.85 percent

Five-year annualized: 27.90 percent

Risk vs. domestic equity funds: average

Morningstar rating: 4 stars

Maximum sales charge: 12b-1 only

Phone number: 800-525-8085

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.