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4 Growth Funds to Buy on May's Upbeat Economic Data
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Recently released economic data has provided mutual fund investors some relief in the United States. The stock market gained traction on the back of a hearty increase in industrial production and consumer spending. In such a bullish scenario, it would be prudent to invest in mutual funds that focus on growth.
Industrial Production Hits 6-Month High
Industrial production in the country gained momentum in May, as it registered 0.4% growth. This rise was largely pushed by the increase in production of cars and pickup trucks, the Federal Reserve noted last week. May’s increased industrial activity also happens to be the strongest monthly rise in six months, given the new strength in autos and appliances.
Total industrial production was 2% higher in May on an annualized basis. The production of business equipment, consumer goods and construction supplies gained momentum in May after a slowdown in April.
This rise in industrial production eased fears of an economic slowdown due to tariff issues and a dull May jobs report, especially at a time when investors are betting on a Fed rate cut in 2019.
Consumer Spending Picks Up
Further, dismissing fears of the economy slowing down in the second quarter, retail sales in the country rose, as American shoppers ramped up spending in the month of May.
According to the Commerce Department, retail sales increased 0.5% last month as consumers bought vehicles and a wide range of other consumer products. Sales of building materials and garden equipment rose 0.1%, sales at auto dealerships increased 0.7%, and online and mail-order purchases climbed 1.4% last month. In addition, sales at restaurants and bars rose 0.7%, and sales in hobby, musical instrument and book stores increased 1.1%.
This solid retail sales report may allow the Fed to wait for some more time before deciding on cutting its benchmark interest rates. After all, a rise in consumer spending is indicative of consumers’ healthy spending power and accounts for more than 70% of the country’s economic activity.
Our Choices
An increase in manufacturing activity and uptick in consumer spending, which are the two pillars of economic activity, could mean that the markets could do well ahead. Therefore, adding mutual funds to your portfolio that invest in companies with high potential for growth makes sense.
We have, thus, selected four such mutual funds for your portfolio. All these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is less than $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Now we come to the second-most vital question: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS Capital Growth Fund - Class A (SDGAX - Free Report) aims for capital growth over a long period. The fund invests the majority of its assets in equity securities of American companies. The fund mostly invests in companies that have market capitalizations similar to those included on the S&P 500 Index or the Russell 1000 Growth Index.
This Zacks sector – Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
SDGAX has an annual expense ratio of 0.94%, which is below the category average of 1.07%. It has year-to-date returns of 16.2%.The minimum initial investment for the fund is $1000.
JPMorgan Large Cap Growth Fund Class R5 (JLGRX - Free Report) aims for long-term capital appreciation. The fund mostly invests in equity securities of large companies. The fund recognizes large-cap companies as those that have market capitalizations similar to the companies included on the Russell 1000 Growth Index at the time of purchase.
This Zacks sector – Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JLGRX has an annual expense ratio of 0.54%, which is below the category average of 1.07%. It has year-to-date returns of 19.2%.There is no minimum initial investment for the fund.
Principal MidCap Growth Fund R-5 Class (PHPPX - Free Report) aims for long-term capital growth. The fund invests a majority of its assets in equity securities of companies with medium market capitalizations at the time of purchase. The fund recognizes medium-sized companies as those that have market capitalization in the range of the companies included on the Russell Midcap Growth Index.
This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PHPPX has an annual expense ratio of 0.93%, which is below the category average of 1.18%. It has year-to-date returns of 19.8%.There is no minimum initial investment for the fund.
TIAA-CREF Mid-Cap Growth Fund Retail Class (TCMGX - Free Report) aims for a favorable total return over a long period of time. The fund invests the majority of its assets in securities of medium-sized domestic companies as defined by the Russell Midcap Growth Index, which the investment adviser believes has the opportunity for growth.
This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
TCMGX has an annual expense ratio of 0.77%, which is below the category average of 1.18%. It has year-to-date returns of 20.9%.The minimum initial investment for the fund is $2500.
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4 Growth Funds to Buy on May's Upbeat Economic Data
Recently released economic data has provided mutual fund investors some relief in the United States. The stock market gained traction on the back of a hearty increase in industrial production and consumer spending. In such a bullish scenario, it would be prudent to invest in mutual funds that focus on growth.
Industrial Production Hits 6-Month High
Industrial production in the country gained momentum in May, as it registered 0.4% growth. This rise was largely pushed by the increase in production of cars and pickup trucks, the Federal Reserve noted last week. May’s increased industrial activity also happens to be the strongest monthly rise in six months, given the new strength in autos and appliances.
Total industrial production was 2% higher in May on an annualized basis. The production of business equipment, consumer goods and construction supplies gained momentum in May after a slowdown in April.
This rise in industrial production eased fears of an economic slowdown due to tariff issues and a dull May jobs report, especially at a time when investors are betting on a Fed rate cut in 2019.
Consumer Spending Picks Up
Further, dismissing fears of the economy slowing down in the second quarter, retail sales in the country rose, as American shoppers ramped up spending in the month of May.
According to the Commerce Department, retail sales increased 0.5% last month as consumers bought vehicles and a wide range of other consumer products. Sales of building materials and garden equipment rose 0.1%, sales at auto dealerships increased 0.7%, and online and mail-order purchases climbed 1.4% last month. In addition, sales at restaurants and bars rose 0.7%, and sales in hobby, musical instrument and book stores increased 1.1%.
This solid retail sales report may allow the Fed to wait for some more time before deciding on cutting its benchmark interest rates. After all, a rise in consumer spending is indicative of consumers’ healthy spending power and accounts for more than 70% of the country’s economic activity.
Our Choices
An increase in manufacturing activity and uptick in consumer spending, which are the two pillars of economic activity, could mean that the markets could do well ahead. Therefore, adding mutual funds to your portfolio that invest in companies with high potential for growth makes sense.
We have, thus, selected four such mutual funds for your portfolio. All these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is less than $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Now we come to the second-most vital question: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS Capital Growth Fund - Class A (SDGAX - Free Report) aims for capital growth over a long period. The fund invests the majority of its assets in equity securities of American companies. The fund mostly invests in companies that have market capitalizations similar to those included on the S&P 500 Index or the Russell 1000 Growth Index.
This Zacks sector – Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
SDGAX has an annual expense ratio of 0.94%, which is below the category average of 1.07%. It has year-to-date returns of 16.2%.The minimum initial investment for the fund is $1000.
JPMorgan Large Cap Growth Fund Class R5 (JLGRX - Free Report) aims for long-term capital appreciation. The fund mostly invests in equity securities of large companies. The fund recognizes large-cap companies as those that have market capitalizations similar to the companies included on the Russell 1000 Growth Index at the time of purchase.
This Zacks sector – Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JLGRX has an annual expense ratio of 0.54%, which is below the category average of 1.07%. It has year-to-date returns of 19.2%.There is no minimum initial investment for the fund.
Principal MidCap Growth Fund R-5 Class (PHPPX - Free Report) aims for long-term capital growth. The fund invests a majority of its assets in equity securities of companies with medium market capitalizations at the time of purchase. The fund recognizes medium-sized companies as those that have market capitalization in the range of the companies included on the Russell Midcap Growth Index.
This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PHPPX has an annual expense ratio of 0.93%, which is below the category average of 1.18%. It has year-to-date returns of 19.8%.There is no minimum initial investment for the fund.
TIAA-CREF Mid-Cap Growth Fund Retail Class (TCMGX - Free Report) aims for a favorable total return over a long period of time. The fund invests the majority of its assets in securities of medium-sized domestic companies as defined by the Russell Midcap Growth Index, which the investment adviser believes has the opportunity for growth.
This Zacks sector – Mid Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
TCMGX has an annual expense ratio of 0.77%, which is below the category average of 1.18%. It has year-to-date returns of 20.9%.The minimum initial investment for the fund is $2500.
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 >>