Now that large-cap-growth stocks have revived, they will likely remain popular, perhaps for years. Here are two great ways to play their resurgence. By Steven Goldberg, Contributing Columnist September 18, 2007 Look a little closer at the last three months of stock-market action, much of it tumultuous, and it's clear there have been smart places to stash your money -- as well as not-so-smart places. Most striking: Morningstar's Large Growth index is up 0.5% over the 13 weeks through September 14, and the Mid Growth index is essentially flat. Meanwhile, the Small Value index plunged 10% and the Mid Value index has tumbled 9%. Stocks of large companies and stocks with relatively fast-growing companies are clearly weathering this storm far better than are stocks of "bargain-priced" small and midsize companies. That's no surprise. When the market heads south, investors like the security of larger companies and of companies whose fortunes are, to some extent, independent of declines in the economy. Plus, after lagging for most of this decade, large-cap-growth stocks have become remarkably cheap relative to other stocks based on price-earnings and price-to-sales ratios. There's been a clear change in the market's leadership. Over the past 12 months, Large Growth has gained 17% and Mid Growth has climbed 24%. By contrast, Small Value has risen just 3% and Mid Value is up 9%. Advertisement What's more important: Once the market changes from small-cap to large-cap or vice versa, the new trend often remains in place for several years. You ignore that historical record at your peril. So which funds should you buy in the newly popular large-cap growth areas? My favorites are Vanguard Primecap Core (symbol VPCCX) and Marsico Growth (MGRIX). Between the two, I like Primecap Core better. Primecap Core charges just 0.6% in annual expenses, while Marsico Growth costs 1.26%. 1. Vanguard Primecap Core Primecap was started in 1984 when the American funds suffered a rare manager departure. Primecap employs the same system as the American funds-that is, several managers are each individually responsible for a portion of the portfolio. Primecap Core has six managers. The firm also employs eight analysts. The Los Angeles-based firm rarely speaks with the media. But Joe Brennan, who works with Vanguard's outside managers, says Primecap manages about $65 billion altogether in the same style it uses in Primecap Core. Vanguard Primecap, which is closed to most new investors, is similar. The Vanguard fund owns fewer midcap stocks than Primecap Core does. Advertisement Brennan is not concerned about asset growth because the firm trades so little. I agree with him. Turnover last year was a mere 10%. Plus, the firm focuses on doing one thing well: managing large-company growth portfolios. "It's essentially one flavor," he says. The managers look for stocks trading at a discount but with compelling growth stories. Then they hang on with enormous patience. At last word, Primecap Core had 26% of its assets in technology and 21% in health care. Dominant companies are finally emerging in many areas of technology. "There are some effective monopolies," says Brennan, such as Oracle (ORCL) and Adobe Systems (ADBE). That's a sea change from the cutthroat competition that has been such a big part of tech. In health care, the managers think the market has marked down drug makers indiscriminately. Some companies won't be hurt in the near future by patent expirations and have solid pipelines. Primecap's favorites include Eli Lilly (LLY), Novartis (NVS) and GlaxoSmithKline (GSK). Advertisement Primecap Core isn't quite old enough to have a three-year record. But near-clone Vanguard Primecap returned an annualized 10% over the past ten years through August 31, beating Standard & Poor's 500-stock index by an average of 4.5 percentage points a year. 2. Marsico Growth Marsico chalked up terrific returns running Janus Twenty for a decade before opening his own shop in Denver. Marsico Growth has returned an annualized 9% from its inception at the end of 1997 through August 31. Growth is less volatile than Primecap and held up just a bit better during the 2000-2002 bear market -- although both funds suffered losses in line with the overall market. Cory Gilchrist, a manager at Marsico's firm, is bullish. "Franchise growth companies are selling as cheaply as anytime since 1992," he says. UnitedHealth (UNH), Schlumberger (SLB) and Comcast (CMCSA) are among his favorites. Marsico's firm is managing $92 billion, and $66 billion of that is in large-cap growth. But the managers and analysts seem capable of handling the assets. I'm a bit more concerned about asset growth at Marsico than at Primecap, given higher turnover, 59% last year, at Marsico. Advertisement Marsico is currently buying back the firm from a Bank of America subsidiary. Gilchrist says a key reason is to ensure that new managers coming into the firm get a piece of the action. Plus, he says, "We saw an opportunity to run our own business, and that was really exciting to us." The firm recently launched Marsico Global (MGLBX) and Marsico Flexible Capital (MFCFX). But Gilchrist says the firm isn't overreaching: "We don't invest with empire builders, and we wouldn't do it ourselves." The bottom line You can't go far wrong with either of these funds. Yes, they'll lose money when the market falls, but probably not as much as the overall market. And when the market moves higher, these funds should be at the head of the pack. Steven T. Goldberg (bio) is an investment adviser and freelance writer.