Looking for a top fund manager who understands risk to steer your growth portfolio through volatile times? Former Navy nuclear submarine officer Doug Rogers ranks high.
Rogers manages Eaton Vance Focused Growth Opportunities (EIFGX). This concentrated mutual fund owns just 35 to 40 stocks. Rogers zeros in on companies benefiting from long-term trends, such as artificial intelligence (AI). He seeks trends to deliver steady, above-average sales growth year-in, year-out — no matter what the economic backdrop is.
The IBD 2025 Best Mutual Funds Awards winner topped the S&P 500 benchmark in the one-, three-, five- and 10-year periods as of year-end 2024. And it's done so by paying close attention to risk.
Steering The Ship Of The Top Fund
Rogers says his stint in the Navy before becoming a money manager taught him about risk-taking.
"When you're several thousand feet below the surface of the ocean, you really want to understand what risks you are taking and whether or not they're worthwhile," Rogers told IBD. "So, that kind of followed me into my role as a fund manager."
With risk-reward in mind, Eaton Vance Focused Growth Opportunities isn't the type of go-go growth fund that loads up on the fastest-growing stocks each year, says Rogers. Rogers and his growth fund team define growth a little bit differently than many rival funds.
"We're not necessarily looking for the highest growth-rate stocks," said Rogers. "We focus on the stability of the growth."
Steady She Goes
Rogers would rather own a growth stock that delivers 5% to 10% revenue growth through any economic cycle than a company that may grow sales by 20% this year, see sales shrink 5% the next year and then post a 10% revenue gain a year after that. "The volatility of growth rates is less compelling to us," said Rogers.
In some markets, eschewing the peppier-growing stocks can hurt returns. But over the long haul the strategy is a winner, he says.
The performance of Eaton Vance Focused Growth Opportunities over multiple time periods backs Rogers up. The fund's 17.7% year-to-date gain through the end of August tops the S&P 500's 16% return, according to fund-tracker Morningstar Direct.
Eaton Vance Focused Growth Opportunities' 24.3% return over the past three years tops both the broad market benchmark and 75% of the its peers. Rogers has steered his portfolio of "high-conviction" stocks to a 15.49% gain over the past 10 years, besting the S&P 500 by nearly a full percentage point.
Top Fund Buys Stocks To Hold
Rogers doesn't buy stocks with the intent of selling them. He's laser focused on names with long-term growth potential. "The best stock you can buy is one that you never have to sell," Rogers said.
These are names that compound and grow wealth year after year. Rogers looks for stocks well positioned to take advantage of secular growth trends. He prefers to buy companies with growth runways of three, five or 10 years, he says.
"We don't get caught up in short-term volatility or slight drawdowns that may cause some investors to make poor, short-term focused trading decisions," Rogers said.
The best companies have steady sales, enabling them to ride out the occasional economic downturn or market storm.
One example is Copart, a company that typically produces annual double-digit revenue with its online auto salvage business. Copart auctions off totaled vehicles on behalf of insurance companies. The damaged vehicles have value due to their spare parts. And cars that can't be fixed economically and put back on U.S. roads can be legally sold for use in many foreign countries, including emerging markets like Latin America and Eastern Europe. Since car crashes happen all the time, the online auctioning of so-called junked cars is seen by many investors as recession-proof.
"They (Copart) get a higher value price than the insurance companies may realize by selling at a local auction because they have a network of buyers around the globe," said Rogers. "You might have a car that can't be restored to its pre-loss condition to be able to be returned to the insured driver in the U.S. But the car may still be drivable and repairable and can be driven elsewhere in the world."
Jumping On AI
Rogers owns shares of companies with steady sales that can weather economic and market volatility. And that is why he isn't spooked by talk of a market bubble or overvaluation in the Magnificent Seven stocks. These stocks pepper Eaton Vance Focused Growth Opportunities' top-10 holdings.
Rogers says he still likes his No. 1 and No. 2 holdings, AI chipmaker Nvidia and Microsoft. The Azure cloud services business and integration of AI into its suite of software products is propelling Microsoft.
While valuations are perhaps a bit high, that's no reason to cash in, he says. "The valuations are nothing egregious and are not reflective of their long-term earnings potential," said Rogers.
Rogers remains bullish on the AI trade, despite fears that the AI hype may have gotten ahead of itself. "We continue to believe that AI is still really underappreciated," said Rogers. "Despite all the bullishness that surrounds AI, the productivity gains that we believe we will continue to see from AI over a long period of time have yet to be recognized."
Other Tech Picks Of This Top Fund
Amazon.com is a stock benefiting from the AI theme that is in Eaton Vance Focused Growth Opportunities, says Rogers. Its cloud-computing AWS business, which provides AI tools and infrastructure to customers, is a Wall Street favorite.
But investors are kind of overlooking Amazon's domination of the e-commerce retail space. "It's performing exceptionally well and driving double-digit revenue growth," said Rogers. Amazon is using AI to boost innovation, which is improving its retail distribution. And the online retailing giant's move into robotics to perform manual tasks at its fulfillment centers as well as its push into the fast-growing online retail grocery business are also big revenue and earnings drivers, says Rogers.
"Grocery is one of the largest untapped total addressable markets (TAM) within e-commerce," said Rogers. "Amazon is extremely well-positioned there."
Investing In Overlooked Gems
An under-the-radar AI stock is Coca-Cola, says Rogers. Big brands in the consumer space like beverage giant Coke have massive marketing and advertising budgets. They can use AI to reach target audiences more cost-effectively. Doing so is expected to drive down costs and drive revenues higher.
"You might not think of Coca-Cola as an AI beneficiary. But it clearly has the potential to benefit (from the new technology)," said Rogers. "We're starting to see a lot of the benefits of AI work their way beyond tech and into other companies as well."
Another AI play Rogers likes is Synopsys, which makes software that helps chipmakers like Nvidia design high-powered AI chips. "It's a picks-and-shovels play behind Nvidia and the chipmakers," said Rogers. The company generates stable revenues, they're innovative, and they've done some recent acquisitions that it sees as adding to growth, says Rogers.
Don't Sell Too Early
Rogers says tech investors evaluating overvaluation face more risk of selling out of the leading AI stocks than they do holding them for the long term. Investors should ride out any market downdrafts. Pullbacks are not the beginning of the end for these powerhouse AI stocks. They are generating huge sales and earnings gains.
"Drawdowns are healthy and shake out some of the weaker holders," said Rogers. "But if you believe in the long-term potential of these companies, you're much better off just holding them throughout any short-term price decline."
Rogers notes that it's tough to time the market and get in and out at the right time. "The likelihood of missing a great buy point or sell point is high," said Rogers.
Top Fund Focusing On Winners
Running a concentrated portfolio involves a lot of input and analysis. And it takes research conducted by analysts and other members of the top-performing fund's team, Rogers says. "What makes it into the portfolio is all centered around debate from our team," said Rogers. "We have a close-knit team and sit within 15 feet of each other."
The fewer stocks a fund owns, says Rogers, the better the fund manager knows what he owns.
And concentrating on themes with staying power is a key to the success of Eaton Vance Focused Growth Opportunities.
"It allows you to really get more exposure to the themes that you think are going to play out over the next decade," Rogers said. "By having a concentrated portfolio, it allows us to get really strong exposure to names that we have high conviction in without diluting it with names we don't have confidence in from a growth perspective."
