Today we are featuring top-performing “Growth” equity mutual funds, which primarily seek long-term growth by investing in equity securities and may have income as a secondary objective.

Investors can find such funds by checking out the entire list of the Zacks #1 Rank Growth Equity Funds.

3 Promising Picks

Merger Fund (MERFX) was incepted in January 1989. It seeks capital growth by investing most of its assets in companies involved in pending mergers, takeovers and other corporate reorganizations.

For most of its investments, this non-diversified fund’s potential profit is equal to the difference between the price at which it acquires the target company’s shares and their expected value upon completion of the transaction. While its holding period may range from a few months to well over a year, most of the fund’s gains are short-term in nature.

Frederick W. Green has been the lead manager of the Merger Fund since its inception. The fund has broadly outperformed total returns of its benchmark index in the last 1-,3- and 5-year periods.

Nakoma Absolute Return (NARFX) seeks to provide positive absolute returns with low volatility independent of market conditions.

The fund invests primarily in equity securities traded in U.S. markets, taking long positions in companies where operating results are expected to exceed investor expectations and establishing short positions in companies that are expected to disappoint or as hedged offsets to long positions. As of November 2008, its turnover ratio was 154%.

The fund’s key holdings include Qualcomm Inc. (QCOM), Wal-Mart Stores Inc. (WMT) and Apollo Group Inc. (APOL).

Waddell & Reed InvestEd Conservative Portfolio A (WICAX) was incepted in October 2001. It seeks capital preservation through a primary emphasis on income and a secondary emphasis on capital growth.

The portfolio is also designed for investors who expect to incur expenses related to higher education within a year or two. It invests primarily in Waddell & Reed Advisors bond and income-producing mutual funds.

Unit holders have to make a minimum initial investment of $500 to enter the fund. It distributes substantially all of its net investment income and realized net capital gains to shareholders annually.

Discover Many More Funds

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our new mutual funds section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward.

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