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S&P 500 Breaks 54-Year Old Record: 3 Growth Funds to Buy
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The broader S&P 500 index has scaled the 13th record close so far in January, topping the previous high of 11 since 1964, according to the WSJ Market Data Group. In fact, the broader index met and exceeded Wall Street analysts’ projected average of 2,819 by the end of this year in just about 14 days of trading. This reflects the equity market’s resilience in recent times.
The index, in the meantime, has been supported by a flurry of tailwinds. Corporate earnings results have so far exceeded expectations, assuring investors that in spite of anxiety over high valuations, demand remains healthy. Estimates for Q4 earnings for most of the sectors are expected to be positive, with Energy, Industrial Products, Basic Materials and Technology poised to post strong gains.
Low level of unemployment, rise in income, more confident consumers and euphoria over the Republican-led tax cut also helped the benchmark move north. The corporate tax rate will be lowered from 35% to 21% and implemented this year, instead of being delayed till 2019. At the same time, any income brought back from overseas will be taxed 8-15.5%, instead of the current 35%.
Lowering of domestic tax rates will boost profits, while a one-time low tax rate on foreign profits will encourage companies to bring funds held overseas back to the United States. This will help such companies carry out a combination of share buybacks, dividend payments and M&A activities.
Play the Stellar Growth With These 3 Growth Funds
As the S&P 500 is all fired up, adding sound large-cap growth mutual funds that will make the most of the bullish run seems judicious. After all, the S&P is an index of 500 large companies with market capitalization of at least $6.1 billion. We have, thus, highlighted three such funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to help investors 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 probable 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).
Franklin Growth A (FKGRX - Free Report) , a Zacks Rank #2 fund, normally invests substantially in the equity securities of U.S.-based large and medium market capitalization companies. FKGRX seeks capital appreciation.
This Large Cap Growth fund, as of the last filing, allocates funds in three major groups — Large Growth, Large Value and High Yield Bond. Further, as of the last filing, Apple Inc, Amazon.com Inc and Northrop Grumman Corp were the top holdings of FKGRX.
The Franklin Growth A fund, managed by Franklin/Temp, has an expense ratio of 0.87%, less than the category average of 1.11%. Moreover, FKGRX requires a minimal initial investment of $1,000.
FKGRX has outperformed the broader S&P 500 index in the last one-year period (+30.7% vs +25%).
Commerce Growth (CFGRX - Free Report) , a Zacks Rank #1 fund, invests a minimum 65% of its total assets in stocks, primarily common stock. It invests principally in stocks of companies that have had below-average price volatility in the past.
This Large Cap Growth fund, as of the last filing, allocates funds in three major groups — Large Growth, Large Value and Intermediate Bond. Further, as of the last filing, Apple Inc, Alphabet Inc and Microsoft Corp were the top holdings of CFGRX.
The Commerce Growth fund, managed by Commerce Funds, carries an expense ratio of 0.82%, less than the category average of 1.11%. Moreover, CFGRX requires a minimal initial investment of $1,000.
CFGRX has outperformed the broader S&P 500 index in a year (+31.1% vs +25%).
Vanguard US Growth Investor (VWUSX - Free Report) , a Zacks Rank #2 fund, invests mainly in large-capitalization stocks of U.S. companies considered as having above-average earnings growth potential and reasonable stock prices in comparison with expected earnings.
This Large Cap Growth fund, as of the last filing, allocates funds in three major groups — Large Growth, Foreign Bond and High Yield Bond. Further, as of the last filing, Facebook Inc, Microsoft Corp and Alphabet Inc were the top holdings of VWUSX.
The Vanguard US Growth Investor fund, managed by Vanguard Group, carries an expense ratio of 0.43%, less than the category average of 1.11%. Moreover, VWUSX requires a minimal initial investment of $3,000.
VWUSX has outperformed the broader S&P 500 index in a year’s time (+37% vs +25%).
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S&P 500 Breaks 54-Year Old Record: 3 Growth Funds to Buy
The broader S&P 500 index has scaled the 13th record close so far in January, topping the previous high of 11 since 1964, according to the WSJ Market Data Group. In fact, the broader index met and exceeded Wall Street analysts’ projected average of 2,819 by the end of this year in just about 14 days of trading. This reflects the equity market’s resilience in recent times.
The index, in the meantime, has been supported by a flurry of tailwinds. Corporate earnings results have so far exceeded expectations, assuring investors that in spite of anxiety over high valuations, demand remains healthy. Estimates for Q4 earnings for most of the sectors are expected to be positive, with Energy, Industrial Products, Basic Materials and Technology poised to post strong gains.
Low level of unemployment, rise in income, more confident consumers and euphoria over the Republican-led tax cut also helped the benchmark move north. The corporate tax rate will be lowered from 35% to 21% and implemented this year, instead of being delayed till 2019. At the same time, any income brought back from overseas will be taxed 8-15.5%, instead of the current 35%.
Lowering of domestic tax rates will boost profits, while a one-time low tax rate on foreign profits will encourage companies to bring funds held overseas back to the United States. This will help such companies carry out a combination of share buybacks, dividend payments and M&A activities.
Play the Stellar Growth With These 3 Growth Funds
As the S&P 500 is all fired up, adding sound large-cap growth mutual funds that will make the most of the bullish run seems judicious. After all, the S&P is an index of 500 large companies with market capitalization of at least $6.1 billion. We have, thus, highlighted three such funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to help investors 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 probable 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).
Franklin Growth A (FKGRX - Free Report) , a Zacks Rank #2 fund, normally invests substantially in the equity securities of U.S.-based large and medium market capitalization companies. FKGRX seeks capital appreciation.
This Large Cap Growth fund, as of the last filing, allocates funds in three major groups — Large Growth, Large Value and High Yield Bond. Further, as of the last filing, Apple Inc, Amazon.com Inc and Northrop Grumman Corp were the top holdings of FKGRX.
The Franklin Growth A fund, managed by Franklin/Temp, has an expense ratio of 0.87%, less than the category average of 1.11%. Moreover, FKGRX requires a minimal initial investment of $1,000.
FKGRX has outperformed the broader S&P 500 index in the last one-year period (+30.7% vs +25%).
Commerce Growth (CFGRX - Free Report) , a Zacks Rank #1 fund, invests a minimum 65% of its total assets in stocks, primarily common stock. It invests principally in stocks of companies that have had below-average price volatility in the past.
This Large Cap Growth fund, as of the last filing, allocates funds in three major groups — Large Growth, Large Value and Intermediate Bond. Further, as of the last filing, Apple Inc, Alphabet Inc and Microsoft Corp were the top holdings of CFGRX.
The Commerce Growth fund, managed by Commerce Funds, carries an expense ratio of 0.82%, less than the category average of 1.11%. Moreover, CFGRX requires a minimal initial investment of $1,000.
CFGRX has outperformed the broader S&P 500 index in a year (+31.1% vs +25%).
Vanguard US Growth Investor (VWUSX - Free Report) , a Zacks Rank #2 fund, invests mainly in large-capitalization stocks of U.S. companies considered as having above-average earnings growth potential and reasonable stock prices in comparison with expected earnings.
This Large Cap Growth fund, as of the last filing, allocates funds in three major groups — Large Growth, Foreign Bond and High Yield Bond. Further, as of the last filing, Facebook Inc, Microsoft Corp and Alphabet Inc were the top holdings of VWUSX.
The Vanguard US Growth Investor fund, managed by Vanguard Group, carries an expense ratio of 0.43%, less than the category average of 1.11%. Moreover, VWUSX requires a minimal initial investment of $3,000.
VWUSX has outperformed the broader S&P 500 index in a year’s time (+37% vs +25%).
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 >>