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The current phase of stock market rally, which began around March 2009, is the best in history. The Nasdaq alone has total returns of more than 500% from lows the market had hit in 2009.
The bull market turned 10 this year in March and Wall Street pundits expect the rally to continue in 2020, on the back of an accommodative monetary policy adopted by the Federal Reserve as well as strong fundamentals of the U.S. economy.
Notably, this is also the longest phase of economic expansion in U.S. history, now in its 11th year. The current cycle of economic expansion which began around June 2009 has easily outdone the record 120-month expansion in the period between March 1991 and March 2001, per the National Bureau of Economic Research.
Economists have attributed this to President Trump’s landmark tax cut of 2018 as well as supportive business regulations.
Per the latest report from the Institute of Supply Management (ISM) on Jan 7, its service index came in at 55% in December, surpassing the consensus estimate of 54.5%. The metric also surpassed its reading of 53.9% in November.
Further, service-oriented firms reported growth in the month and boosted the overall service activity in the country. The rise was supported by improving conditions on the trade war front, coupled with excellent holiday sales.
Anthony Nieves, chair of The Institute for Supply Management stated that, “The respondents are positive about the potential resolution on tariffs; however, respondents continue to have difficulty with labor resources.”
President Donald Trump’s top economic advisor, Larry Kudlow, told CNBC on Tuesday that GDP growth in the U.S. should hit at least 3% in 2020.
“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” said Kudlow, National Economic Council director. “You’ve gone from 1.5% to 2% growth. We had it going at almost 4%, then the Fed tightened.”
“We’re now down to 2.5% to 3%. I’m looking for faster growth: I think we’re going to get 3% this year,” he added. “The trade deals will help, the Fed changed policy — that was very, very important.”
Why Invest in Aggressive Growth Funds?
Aggressive growth mutual funds are ideal for investors seeking high capital growth. These funds mostly invest in companies that have potential for high growth, thus offering the risk of greater instability in share price performances. These funds also invest in IPOs, volatile securities and undervalued stocks in order to generate high returns. The fund advisor chooses the securities for purchase based on their profitability and growth potential.
The current market scenario is apt for such investments because a likely rate cut by the central bank could boost Wall Street ahead.
The question here is: 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).
4 Best Fund Choices
We have selected four best-performing aggressive growth mutual funds that you could consider adding to your portfolio. These funds either carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have provided encouraging three-year annualized returns. Additionally, the minimum initial investment is within $5000.
Vanguard Strategic Equity Fund Investor Shares (VSEQX - Free Report) seeks capital growth. The fund invests in small- and mid-capitalization domestic equity securities based on the fund advisor’s judgement of the relative return potential of the securities. The fund invests the majority of its shares in equity securities.
This Zacks sector – Mid Cap Blend 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.
VSEQX has returned 8.3% in the past three years. The fund has an annual expense ratio of 0.78%, which is below the category average of 1.20%.
Janus Henderson Enterprise Fund Class T (JAENX - Free Report) invests about half of its equity assets in medium-sized companies. JAENX aims for capital growth. These companies are those that have market capitalizations in the range of companies in the Russell 2500 Growth Index. The fund may also invest in foreign securities and emerging market investments.
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.
JAENX has returned 19.1% in the past three years. The fund has an annual expense ratio of 0.91%, which is below the category average of 1.17%.
T. Rowe Price New Horizons (PRNHX - Free Report) seeks long-term capital appreciation by investing in a diversified group of emerging businesses. These businesses usually have a high probability of accelerating earnings growth that depend on factors such as reformed management, new products and services or structural changes in the economy.
This Zacks sector – Small 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.
PRNHX has returned 23.5% in the past three years. The fund has an annual expense ratio of 0.77%, which is below the category average of 1.17%.
Lord Abbett Developing Growth R6 (LADVX - Free Report) seeks long-term capital growth by investing in a diversified set of small-cap companies that have high possibility of growth. The fund invests about 65% of its net assets in securities of emerging companies and may invest up to 10% of its assets in non-U.S. companies as well.
This Zacks sector – Small 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.
LADVX has returned 22.1% in the past three years. The fund has an annual expense ratio of 0.60%, which is below the category average of 1.23%.
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4 Best Aggressive Growth Mutual Funds for 2020
The current phase of stock market rally, which began around March 2009, is the best in history. The Nasdaq alone has total returns of more than 500% from lows the market had hit in 2009.
The bull market turned 10 this year in March and Wall Street pundits expect the rally to continue in 2020, on the back of an accommodative monetary policy adopted by the Federal Reserve as well as strong fundamentals of the U.S. economy.
Notably, this is also the longest phase of economic expansion in U.S. history, now in its 11th year. The current cycle of economic expansion which began around June 2009 has easily outdone the record 120-month expansion in the period between March 1991 and March 2001, per the National Bureau of Economic Research.
Economists have attributed this to President Trump’s landmark tax cut of 2018 as well as supportive business regulations.
Per the latest report from the Institute of Supply Management (ISM) on Jan 7, its service index came in at 55% in December, surpassing the consensus estimate of 54.5%. The metric also surpassed its reading of 53.9% in November.
Further, service-oriented firms reported growth in the month and boosted the overall service activity in the country. The rise was supported by improving conditions on the trade war front, coupled with excellent holiday sales.
Anthony Nieves, chair of The Institute for Supply Management stated that, “The respondents are positive about the potential resolution on tariffs; however, respondents continue to have difficulty with labor resources.”
President Donald Trump’s top economic advisor, Larry Kudlow, told CNBC on Tuesday that GDP growth in the U.S. should hit at least 3% in 2020.
“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” said Kudlow, National Economic Council director. “You’ve gone from 1.5% to 2% growth. We had it going at almost 4%, then the Fed tightened.”
“We’re now down to 2.5% to 3%. I’m looking for faster growth: I think we’re going to get 3% this year,” he added. “The trade deals will help, the Fed changed policy — that was very, very important.”
Why Invest in Aggressive Growth Funds?
Aggressive growth mutual funds are ideal for investors seeking high capital growth. These funds mostly invest in companies that have potential for high growth, thus offering the risk of greater instability in share price performances. These funds also invest in IPOs, volatile securities and undervalued stocks in order to generate high returns. The fund advisor chooses the securities for purchase based on their profitability and growth potential.
The current market scenario is apt for such investments because a likely rate cut by the central bank could boost Wall Street ahead.
The question here is: 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).
4 Best Fund Choices
We have selected four best-performing aggressive growth mutual funds that you could consider adding to your portfolio. These funds either carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have provided encouraging three-year annualized returns. Additionally, the minimum initial investment is within $5000.
Vanguard Strategic Equity Fund Investor Shares (VSEQX - Free Report) seeks capital growth. The fund invests in small- and mid-capitalization domestic equity securities based on the fund advisor’s judgement of the relative return potential of the securities. The fund invests the majority of its shares in equity securities.
This Zacks sector – Mid Cap Blend 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.
VSEQX has returned 8.3% in the past three years. The fund has an annual expense ratio of 0.78%, which is below the category average of 1.20%.
Janus Henderson Enterprise Fund Class T (JAENX - Free Report) invests about half of its equity assets in medium-sized companies. JAENX aims for capital growth. These companies are those that have market capitalizations in the range of companies in the Russell 2500 Growth Index. The fund may also invest in foreign securities and emerging market investments.
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.
JAENX has returned 19.1% in the past three years. The fund has an annual expense ratio of 0.91%, which is below the category average of 1.17%.
T. Rowe Price New Horizons (PRNHX - Free Report) seeks long-term capital appreciation by investing in a diversified group of emerging businesses. These businesses usually have a high probability of accelerating earnings growth that depend on factors such as reformed management, new products and services or structural changes in the economy.
This Zacks sector – Small 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.
PRNHX has returned 23.5% in the past three years. The fund has an annual expense ratio of 0.77%, which is below the category average of 1.17%.
Lord Abbett Developing Growth R6 (LADVX - Free Report) seeks long-term capital growth by investing in a diversified set of small-cap companies that have high possibility of growth. The fund invests about 65% of its net assets in securities of emerging companies and may invest up to 10% of its assets in non-U.S. companies as well.
This Zacks sector – Small 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.
LADVX has returned 22.1% in the past three years. The fund has an annual expense ratio of 0.60%, which is below the category average of 1.23%.
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 >>