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3 Growth Funds to Buy on Solid January Consumer Sentiment
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Inflation has declined sharply and the economy is expected to make a softer landing than it was expected earlier. This has made U.S. consumers upbeat about the economy’s future. The preliminary index of the University of Michigan consumer sentiment survey came up with a reading of 78.8 in January, surpassing estimates of 69.7.
The 13.1% jump in January is also the fastest pace on the index since December 2005 and the highest level since July 2021.
The sub-index for the current economic condition increased to 83.3 in January from 73.3 in December. Also, the sub-index for consumer expectations in January climbed to 75.9 from 67.4 in December.
The survey's measurement of one-year inflation expectations fell to 2.9% in January, declining from the previous month’s reading of 3.1%, the lowest level since December 2020. Moreover, the long-run, or five-year, inflation expectations fell to 2.8%, dropping below the 2.9-3.1% range observed for 26 of the past 30 months.
Understandably, easing inflation has raised optimism among investors as the Federal Reserve, too, has hinted that the monetary tightening regime is likely over. Expectations are now high that the Federal Reserve will start rate cuts soon, which could be as early as March. Investors are hoping for three 25-basis point rate cuts in 2024.
3 Best Choices
Considering the signals and market reactions, growth-oriented mutual funds are currently seen as appealing choices for investors looking to navigate and capitalize on evolving economic conditions.
We have identified three growth funds that are worth considering for purchase. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is, why investors should consider mutual funds. Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Schwab Select Large Cap Growth (LGILX - Free Report) fund invests most of its assets in equity securities of large-cap companies. LGILX advisors also invest in foreign equity securities.
Schwab Select Large Cap Growth fund has a track of positive total returns for over 10 years. Specifically, LGILX’s returns over the three and five-year benchmarks are 3.3% and 15.1%, respectively. The annual expense ratio of 0.75% is lower than the category average of 0.99%. LGILX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Madison Mid Cap Fund (GTSGX - Free Report) seeks long-term growth. GTSGX invests at least 80% of its net assets in the common stock of mid-sized companies. Generally, Madison Mid Cap Fund invests in companies that have a market capitalization between $1 billion and $10 billion at the time of purchase.
Madison Mid Cap Fund has a track of positive total returns for over 10 years. Specifically, GTSGX’s returns over the three and five-year benchmarks are 11.4% and 15.1%, respectively. The annual expense ratio of 0.85% is lower than the category average of 0.94%. GTSGX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
T. Rowe Price Integrated US Sm Gr Eq (PRDSX - Free Report) fund seeks long-term capital appreciation by investing primarily in common stocks at small growth companies. PRDSX invests 80% of its net assets in small-cap growth companies, defined as those whose market capitalization is within the range of smaller companies on the Standard & Poor's 500 Stock Index.
T. Rowe Price Integrated US Sm Gr Eq fund has a track of positive total returns for over 10 years. Specifically, PRDSX’s returns over the three and five-year benchmarks are 1.5% and 11.5%, respectively. The annual expense ratio of 0.80% is lower than the category average of 1.21%. PRDSX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
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3 Growth Funds to Buy on Solid January Consumer Sentiment
Inflation has declined sharply and the economy is expected to make a softer landing than it was expected earlier. This has made U.S. consumers upbeat about the economy’s future. The preliminary index of the University of Michigan consumer sentiment survey came up with a reading of 78.8 in January, surpassing estimates of 69.7.
The 13.1% jump in January is also the fastest pace on the index since December 2005 and the highest level since July 2021.
The sub-index for the current economic condition increased to 83.3 in January from 73.3 in December. Also, the sub-index for consumer expectations in January climbed to 75.9 from 67.4 in December.
The survey's measurement of one-year inflation expectations fell to 2.9% in January, declining from the previous month’s reading of 3.1%, the lowest level since December 2020. Moreover, the long-run, or five-year, inflation expectations fell to 2.8%, dropping below the 2.9-3.1% range observed for 26 of the past 30 months.
Understandably, easing inflation has raised optimism among investors as the Federal Reserve, too, has hinted that the monetary tightening regime is likely over. Expectations are now high that the Federal Reserve will start rate cuts soon, which could be as early as March. Investors are hoping for three 25-basis point rate cuts in 2024.
3 Best Choices
Considering the signals and market reactions, growth-oriented mutual funds are currently seen as appealing choices for investors looking to navigate and capitalize on evolving economic conditions.
We have identified three growth funds that are worth considering for purchase. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is, why investors should consider mutual funds. Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Schwab Select Large Cap Growth (LGILX - Free Report) fund invests most of its assets in equity securities of large-cap companies. LGILX advisors also invest in foreign equity securities.
Schwab Select Large Cap Growth fund has a track of positive total returns for over 10 years. Specifically, LGILX’s returns over the three and five-year benchmarks are 3.3% and 15.1%, respectively. The annual expense ratio of 0.75% is lower than the category average of 0.99%. LGILX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Madison Mid Cap Fund (GTSGX - Free Report) seeks long-term growth. GTSGX invests at least 80% of its net assets in the common stock of mid-sized companies. Generally, Madison Mid Cap Fund invests in companies that have a market capitalization between $1 billion and $10 billion at the time of purchase.
Madison Mid Cap Fund has a track of positive total returns for over 10 years. Specifically, GTSGX’s returns over the three and five-year benchmarks are 11.4% and 15.1%, respectively. The annual expense ratio of 0.85% is lower than the category average of 0.94%. GTSGX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
T. Rowe Price Integrated US Sm Gr Eq (PRDSX - Free Report) fund seeks long-term capital appreciation by investing primarily in common stocks at small growth companies. PRDSX invests 80% of its net assets in small-cap growth companies, defined as those whose market capitalization is within the range of smaller companies on the Standard & Poor's 500 Stock Index.
T. Rowe Price Integrated US Sm Gr Eq fund has a track of positive total returns for over 10 years. Specifically, PRDSX’s returns over the three and five-year benchmarks are 1.5% and 11.5%, respectively. The annual expense ratio of 0.80% is lower than the category average of 1.21%. PRDSX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>