Thar she blows! A gigantic mass moving off the port side! It's huge! I've ne'er seen the likes of her before! It's a giant manatee ... no, a sperm whale ... no, wait! It's ... American Funds Growth Fund of America (FUND:AGTHX)?

A whale of a fund
Moby Dick it may not be, but Growth Fund of America, with more than $165 billion in net assets, is the largest single mutual fund currently in existence, dwarfing even the colossal Vanguard 500 Index Fund (VFINX) at $120 billion. Much has been made lately of the fund's burgeoning size, with a growing chorus of critics claiming that the level of asset flows into Growth Fund has begun to weigh it down and is hindering management's ability to invest all available cash and continue to uncover new investment opportunities.

It's true that no fund can grow in perpetuity without suffering the pernicious side effects of asset bloat. And the recent division of the investment staff at Capital Research & Management, the fund's advisor, is a direct result of the incredible growth in the assets and personnel that the firm has experienced in recent years.

Furthermore, Growth Fund lagged the broader market in 2006, posting a 10.9% return versus a 15.8% gain for the S&P 500. This performance gave the naysayers surefire evidence of the fund's engorgement and subsequent underperformance. Could Growth Fund, in fact, be sinking under its own weight?

Size isn't everything
While the concerns regarding the fund's size are well-founded, Foolish investors virtually have to tie themselves to the mast of the ship to avoid succumbing to the siren song of impending disaster that's being predicted. While increasing inflows will undoubtedly make management's job more difficult going forward, Capital Research & Management has shown its multiple portfolio counselor system to be quite adept at managing high volumes of assets. Theoretically, more and more portfolio counselors could continue to be added to the fund to accommodate increasing levels of new assets.

Even at current asset and staffing levels, Growth Fund exhibits enough differentiation from broad market indices to quell the argument that the fund itself is beginning to look like the market as a result of its size. For example, the fund currently maintains a 9.6% sector allocation to financials, less than half of the 21.6% weight of financial companies in the S&P 500 index. Likewise, Growth Fund's largest sector allocation is currently in information technology (20.6% of assets), compared with a 14.8% weight for the benchmark S&P 500.

Furthermore, correlation data through March 31 indicates that the fund's three-year correlation with the S&P 500 Index is 0.89 -- definitely indicative of a large-cap investment process, but not one that tracks the overall market too closely. Even with the increased asset load, management has still been able to identify a sufficient number of attractive growth-oriented securities in which to invest. For example, the fund's top holdings currently include Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and Oracle (NASDAQ:ORCL).

Is bigger better?
Overall, Growth Fund has posted favorable long-term returns, with a 10-year annualized return of 13%, versus 8.2% for the S&P 500 Index and 5.5% for the Russell 1000 Growth Index through March 31. The fund has managed to beat the S&P 500 in seven of the past nine years, trailing only by 0.4% in 2001. Admittedly, the fund did lag the S&P 500 by 4.9% in 2006, but in all fairness, large-cap funds generally performed poorly compared with the S&P last year. So the fund's recent underperformance, while disappointing, is not out of line with the recent experience of other large-cap growth funds.

It may be that a period of cooler performance might actually be a good thing for the fund, as some of the more speculative asset flows might taper off. At any rate, it is very premature to link the fund's lagging performance to its expanding asset base.

All signs suggest that Growth Fund of America still has some room to run. The fund has amassed an impressive long-term track record managing money under its multiple portfolio counselor system -- a track record that most mutual funds just a fraction of its size have been unable to match.

And that's a whale of an achievement.

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Fool contributor Amanda Kish lives in Rochester, N.Y., and does not own shares of any of the companies or funds mentioned herein. Microsoft is an Inside Value recommendation. The Fool has a disclosure policy.