TCW GALILEO LARGE CAP GROWTH FUND

The TCW Galileo Funds Large Cap Growth Fund, (800-386-3829), has been around since the mid-1990s. Catch is, you had to have big bucks, ($250.000), to become a shareholder in it. In March 1999, however, the fund introduced its N shares. The minimum investment on that class of shares is $2000. From March through December, 1999, the fund's N shares were up 50.85 percent. This year, through the end of August, their total return was up over 10 percent.

Wendy Barker has been portfolio manager of TCW Galileo's Large Cap Growth Fund since its inception in 1997. She's 33, and been professionally managing money since 1996. Here's what she's got to say about the fund:

Q: What's your strategy for investing in this fund?

Barker: We are very focused and style specific looking at just the growth part of the large cap market.

What that basically means is we just hyper-focus on the stocks that make up the various indices, like the S & P Growth Index and the Russell 1000 Growth Index. And really don't deviate too far way from the Barra Growth Index.

Now, I don't want to give you the impression that we're like a closet index fund. We're not. We don't have to own any the companies that are in the indexes if we don't want to.

Q: I'm a little confused here.

Barker: In the Barra Growth Index specifically, there are currently about 112 names and the top 20 names, based on market capitalization, account for 60 percent of the entire index.

What we'll do is really study the top names. And they include companies like General Electric, Intel and Cisco and it (Cisco) makes up about 7.5 percent of the index. Because we're focusing on the index, and we're representing the weightings that they represent, we make our bets accordingly.

So, if we really like Cisco, we're going to own more than that 7.5 percent. If we don't like it, we'll own a little bit less.

Q: So you use the indices as kind of a blueprint from which you then make your own judgment calls?

Barker: Yes. But because we hyper-focus on the index, it kind of differentiates us from others. Many of my competitors, for example, if they own Cisco might own only 4.5 percent in their portfolios. What many people don't understand is that by doing so, they are actually betting against Cisco, relative to the index, because they are underweighting it to the index.

Q: About how many stocks do you have in the fund?

Barker: Between 40 and 60. We currently own about 60 names.

Q: Do you invest with a theme in mind?

Barker: We don't have a theme, per se, but we do pay very close attention to what's in the indexes and we are very very bullish on technology. Right now we own about 53-54 percent in technology. The Russell 1000 has about 58 percent in technology stocks and in the S & P Growth Index, about 60 percent.

One of the reasons that we like technology is because we think that the Internet buildout is just getting started. And the kinds of companies we invest in are the best around. Companies like Intel, Cisco, Sun Microsystems, Nortel. These companies have proprietary technology that they dominate their field in.

Q: Any company that you're excited about right now?

Barker: We're excited about Verisign. They provide security on the Internet and also have the rights to sell URL's. They've got a very good business.

Q: What about a company that has disappointed you?

Barker: Lucent has been kind of a disappointment. We did own the stock but sold it last year. They missed their numbers and they are in one of the fastest growing parts of the economy so the ability to execute is critical.

Q: Who is this fund ideally for?

Barker: Those that want the best of the blue chips, is the way I would phrase it. It's a very high quality fund. We scour the growth indexes for quality companies. Right now we've got what is arguably the best Internet companies to choose from on the planet.

Q: And the risks?

Barker: If the large cap growth stocks, in general, come under selling pressure for whatever reasons, the investor will feel the pain because those are the stocks that we hyper-focus on. But when the large cap growth market does well, we hope to add a couple of hundred basis points a year in performance above that of our benchmarks.

Q: I hear that you're into outdoor sports. Specifically mountain and rock climbing. Any connection between climbing mountains and portfolio management?

Barker: Obviously the job of a portfolio manager is very challenging in terms of dealing with a lot of information being thrown at you all at once. And requires that you be methodical about how you approach problems. Plus being focused and careful. I think the same type of skills are required outside when you are climbing 14,000 foot peaks.

To read more articles, please visit the column archive.