This little-known fund has just $1.4 billion in assets. But it's a superb investment that's worth a look. By Steven Goldberg, Contributing Columnist February 23, 2011 T. Rowe Price New America Growth Fund (symbol PRWAX) is a fund that often gets overlooked. That could be because it comes from a firm that made its reputation in growth stocks and boasts other good growth funds. But New America Growth is worthy of your attention. From July 2002, when Joe Milano took over as the fund's manager, through February 21, the fund returned an annualized 10.9%. That's nearly three percentage points per year better than Standard & Poor's 500-stock index. The fund ranks in the top 7% among large-company-growth funds over the past five years. What's more, under Milano it has lagged its rivals in only one year, 2005. At 38, Milano is relatively young and strikes me as having plenty of fire in his belly. Yet after 15 years at Price, he's experienced enough to have learned from his mistakes. Says Milano: "After 2005, I asked myself what mistakes I had made, and the answer was that I wasn’t at all focused on the big picture. I had missed the rise of China and commodity prices." Since then, Milano, who skipped class in college to watch CNBC and who has a passion for picking stocks, has kept "one eyeball on the big picture." Advertisement At $1.4 billion, New America Growth is not one of Price's behemoths. It's small enough that Milano can mix shares of some midsize companies in with more traditional large-capitalization fare. That doesn’t please pension consultants, who like funds to stick within a particular "style box," but it makes for a more flexible fund. Milano says that after a nearly two-year bull market, he has dialed back a bit on risk. He predicts that economies in the developed world will grow at about 2% to 4% annually. But he thinks that although growth in emerging markets will remain robust, those countries will lose some momentum as their governments take steps to fight inflation. Milano has 16% of the fund in health-care stocks, a traditionally defensive sector. He likes Laboratory Corporation of America (LH). The company is one of two dominant players in the business of conducting medical tests. Because of high unemployment, some people cut back on routine diagnostic tests, such as pap smears. Now that the economy is recovering and the job picture is starting to improve a bit, Milano says, LabCorp's revenues and profits should improve. Technology and telecommunications claim 30% of the fund's assets -- its biggest weighting. Milano sees tech products and services as "productivity enhancers" that businesses must buy. He doesn't own many hardware makers, arguing that their products are susceptible to price cutting. Instead, he likes software. His favorites in tech include Adobe Systems (ADBE), Apple (AAPL) and Google (GOOG). Although Apple is known for its hardware, you'll be hard-pressed to find a big-cap growth manager who doesn't own the stock. Advertisement Milano is also bullish on late-stage cyclical -- companies that do best well into an economic recovery. For instance, he owns Ireland-based Cooper Industries (CBE), which makes a wide array of electrical products for utilities and other businesses. "Cooper's fundamentals are just now turning," says Milano. He's particularly bullish on agriculture. The story here is simple: As emerging markets continue to grow, their citizens add more meat to their diets. That increases demand for grains. "I’ve been on this theme for years," Milano says. "There's not enough arable land; there's not enough fresh water." What's more, a spate of bad weather recently has hurt crops around the world. Milano’s agriculture stocks include seed giant Monsanto (MON), fertilizer companies Potash Corp. of Saskatchewan (POT) and Mosaic (MOS), and irrigation-equipment maker Valmont Industries (VMI). He has lightened up on other commodities, notably metals. But he still owns Freeport-McMoRan Copper & Gold (FCX) and some energy stocks. "It’s hard to believe that inflation isn’t coming," says Milano, "regardless of what the Federal Reserve says." Steven T. Goldberg (bio) is an investment adviser in the Washington, D.C. area.