3 Funds to Buy as Consumer Confidence Hits 25-Month High

USAUX BRGIX FSBDX

Americans are a lot more confident now than they were a few months back. The Conference Board said on Jan 30 that the index for consumer confidence level soared to 114.8 in January, higher than December’s reading of 108, and the highest level since December 2021.

The sub-index reflecting the present economic situation rose from 73.3 in December to 83.3 in January. Similarly, the sub-index indicating consumer expectations increased to 75.9 in January, surpassing the December figure of 67.4.

The consumer confidence reading follows the University of Michigan’s consumer sentiment report, which was released earlier in January. The preliminary index of the U.S. consumer sentiment rose to 78.8 in January, well above the analysts’ expectations of 69.7, to its highest since July 2021.

Easing inflation has raised optimism that the Federal Reserve will soon start cutting interest rates. The Federal Reserve also earlier indicated that the interest rate hike campaign is likely over and rate cuts will be implemented in 2021.

Although the central bank somewhat dashed hopes last week that the first rate cut is unlikely in March, hopes are still high that there will be at least three rate cuts of 25 basis points each this year.

Lower rate cuts are further going to ease the price burden on consumers and allow them more purchasing power.

The solid jump in consumer confidence proves that people are a lot more relaxed about the economy’s health now. Investors can thus bet on some top-ranked large-cap growth funds like Fidelity Series Blue Chip Growth Fund (FSBDX - Free Report) , Bridges Investment Fund (BRGIX - Free Report) and Victory Aggressive Growth (USAUX - Free Report) .

3 Best Choices

We have, thus, selected three large-cap mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $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 in identifying 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.

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).

Fidelity Series Blue Chip Growth Fund invests in common stocks of blue-chip companies which generally have large or medium-market capitalizations. FSBDX is non-diversified.

Fidelity Series Blue Chip Growth Fund (has a track of positive total returns for over 10 years. Specifically, FSBDX’s returns over the three and five-year benchmarks are 6.6% and 21.4%, respectively. The annual expense ratio of 0% is lower than the category average of 0.99%. FSBDX 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 Blue Chip Growth fund’s objective is to provide long-term capital growth. TRBCX invests at least 80% of net assets in common stocks of large and medium-sized blue-chip companies that have the potential for above-average growth in earnings and are well-established in their respective industries.

T. Rowe Price Blue Chip Growth fund has a track of positive total returns for over 10 years. Specifically, TRBCX’s returns over the three and five-year benchmarks are 2.6% and 13.6%, respectively. The annual expense ratio of 0.57% is lower than the category average of 0.99%. TRBCX 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.

Bridges Investment Fund’s primary investment objective is long-term capital growth, with a secondary objective of generating moderate investment income. BRGIX seeks to achieve its objectives by investing primarily in a diversified portfolio of common stocks and convertible securities that the fund management believes offers the potential for increased earnings and dividends over time.

Bridges Investment Fund has a track of positive total returns for over 10 years. Specifically, BRGIX’s returns over the three and five-year benchmarks are 10% and 17.4%, respectively. The annual expense ratio of 0.75% is lower than the category average of 0.99%. BRGIX 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.

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