The Columbia Large Cap Growth Fund Inst (GEGTX) - Mounting A Strong Defense

| About: Columbia Large (GEGTX)

Summary

The Columbia Large Cap Growth Fund Inst has been in the top 10 of its Morningstar Large Growth Category for the past ten years.

The fund has outpaced the S&P 500 and Morningstar Category in terms of volatility returns over the past 3 years, 5 years and 10 years.

The fund has done a better job than its benchmark in terms of limiting losses in declining markets.

The Columbia Large Cap Growth Fund Inst (MUTF:GEGTX) has outperformed the S&P 500 and its Morningstar benchmark over the past two years. Furthermore, the fund has managed to stay within the top 10 of the Morningstar Large Growth Category over this same period of time.

In spite of the fact that the fund's return declined by just over 5% to a total of 9.09% in 2015. However, the fund's outperformance of the S&P 500 and benchmark only increased in comparison to 2014. The Columbia Large Cap Growth Fund Inst beat the S&P 500 and benchmark by 7.7% and 5.49% respectively.

This is impressive given the fund's surprising amount of weight placed in riskier mid-cap stocks compared to its benchmarks. This can be seen in the market capitalization chart below:

Size

% of Portfolio

Benchmark

Category Avgas

Giant

43.38

47.26

63.45

Large

30.78

32.22

16.81

Medium

25.21

19.09

17.40

Small

0.63

1.41

2.23

Micro

0.00

0.03

0.12

Click to enlarge

In terms of volatility measures, the fund has mostly outperformed in terms of 3 year, 5 year and 10 year measurements in comparisons to its benchmarks. Here are the charts below.

3-Year Trailing

Standard Deviation

Return

Sharpe Ratio

Sortino Ratio

GEGTX

11.68

17.59

1.45

3.00

S&P 500 TR USD

10.62

15.13

1.38

2.73

Category: LG

11.58

15.27

1.29

2.6

Click to enlarge

5-Year Trailing

Standard Deviation

Return

Sharpe Ratio

Sortino Ratio

GEGTX

13.17

13.73

1.04

1.84

S&P 500 TR USD

11.70

12.57

1.07

1.91

Category: LG

13.22

11.70

0.91

1.59

Click to enlarge

10-Year Trailing

Standard Deviation

Return

Sharpe Ratio

Sortino Ratio

GEGTX

16.03

8.55

0.52

0.75

S&P 500 TR USD

15.06

7.31

0.47

0.66

Category: LG

16.42

7.33

0.44

0.64

Click to enlarge

In my recent fund analysis of the T-Rowe Price Blue Chip Growth Fund No Load, I analyzed the fund's declining downside capture ratio as a measurement of the fund's stronger defense against losses in declining periods.

The same holds true for the Columbia Large Cap Fund Growth Inst. As the time periods for downside capture ratios have shortened, the downside capture ratios have declined. This can be seen in the graph below:

Click to enlarge

The fund's expense ratio is slightly above the Morningstar fee level group median, but 0.34 cents below the Morningstar category average.

IS TECH SECTOR CONCENTRATION A CONCERN?

It may behoove fund manager John T. Wilson to take a second look at the level of fund concentration in the technology sector. The Columbia Large Cap Fund Growth Inst's concentration in the technology sector significantly outweighed its benchmark and category average. This can be seen below.

Sector

% of Stocks

Benchmark

Category Average

Technology

30.00

23.85

25.21

Click to enlarge

In similar fashion to the New York Jets and the Cincinnati Bengals, 2016 has not been kind to technology stocks so far. Four out of the top 5 holdings include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Facebook (NASDAQ:FB) and Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG). All of these holdings are in the red right now. There is still a long way to go in this year, but investors of this fund can only hope that John T. Wilson has a Plan B if technology stocks continue to struggle in this fashion this year.

BOTTOM LINE

I will give fund manager John T. Wilson the benefit of the doubt. The positives greatly outweigh the negatives in this fund and an average expense ratio. I have no doubt that he will do what it takes to ensure the fund's outperformance once again this year.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.