Inflation is showing signs of easing, with U.S. consumer prices rising only modestly in July. Oil prices also declined for the second consecutive month, offering some relief to consumers who have been concerned about the strength of the economy.

While inflation is still elevated, signs of moderation could help restore consumer confidence. The smaller-than-expected increase in prices could also reduce expectations that the Federal Reserve will raise interest rates next month.

Against this backdrop, large-cap growth funds, such as Fidelity Blue Chip Growth K6 (FBCGX Quick QuoteFBCGX - Free Report) , Schwab Select Large Cap Growth (LGILX Quick QuoteLGILX - Free Report) and Fidelity Contrafund (FCNTX Quick QuoteFCNTX - Free Report) appear to be attractive buys.

Inflation Shows Signs of Cooling

The consumer price index (CPI), a key inflation gauge closely monitored by the Federal Reserve, increased 0.1% sequentially in July, in line with the consensus estimate, according to data from the Bureau of Labor Statistics released on Wednesday. Core CPI, which excludes volatile food and energy prices, climbed 0.2% for the month.

On a year-over-year basis, CPI increased 3.4% in July, down from 3.5% in June. Core CPI rose 2.5% year over year, compared with 2.6% in the previous month. Energy prices declined 1.5% after dropping 5.7% from a month earlier. Both food and shelter costs advanced 0.1%.

The inflation report came just days after data showed an unexpected decline in U.S. employment in July. Inflation had accelerated earlier in the year amid the U.S.-Iran conflict, which pushed oil prices up 10.9% in March.

However, a temporary ceasefire and growing optimism surrounding peace negotiations between the two countries have helped energy prices retreat over the past two months. The Federal Reserve had been expected to raise interest rates by 25 basis points next month in its bid to bring down inflation.

Although inflation remains above the Fed’s 2% target, moderating price pressures combined with unexpectedly weak job growth could encourage the central bank to wait before making another rate move.

Lower borrowing costs would provide consumers with greater spending power, potentially supporting economic growth and benefiting consumer-focused businesses.

3 Large-Cap Growth Funds With Upside

We have selected three large-cap growth funds that are poised to gain from the above factors. Moreover, these funds have encouraging three- and five-year returns. 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 Blue Chip Growth K6 fund invests most of its net assets in common stocks of blue-chip companies, according to Fidelity Management & Research Company LLC. FBCGX advisors generally choose to invest in large or medium market-capitalization companies.

Fidelity Blue Chip Growth K6 fund has a track record of positive total returns for over 10 years. Specifically, FBCGX’s returns over the three- and five-year benchmarks are 24.9% and 13.6%, respectively. FBCGX has an annual expense ratio of 0.45% and 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.

Schwab Select Large Cap Growth 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 record of positive total returns for over 10 years. Specifically, LGILX returns over the three- and five-year benchmarks are 17.6% and 7.4%, respectively. The annual expense ratio of 0.74% is lower than the category average of 0.74%. LGILX 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.

Fidelity Contrafund seeks capital appreciation. FCNTX invests primarily in the common stock of companies whose value management believes is not fully recognized by the public.

Fidelity Contrafund has a track record of positive total returns for over 10 years. Specifically, FCNTX’s returns over the three and five-year benchmarks are 23.6% and 13.5%, respectively. FCNTX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.75%.

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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