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U.S GDP expanded at a steady clip in the third quarter. The Trump administration’s tax cut program was the primary force that powered expansion in the third quarter. Additionally, corporate profits before interest grew highest on a yearly basis in six years.
Although, the economy encountered a few negatives, it is still on track to meet the Trump administration’s annual growth target of 3%. With the domestic economy witnessing expansion, growth mutual funds that have strong exposure in the United States have emerged as prudent investment options.
Q3 GDP Steady in Second Estimate
The second estimate of third-quarter GDP revealed that the U.S. economy expanded at an annualized pace of 3.5% during the period, unchanged from the first estimate released in October. The economy benefitted from non-residential fixed investment, PCE, federal government spending and state and local government spending, and private inventory investment. Meanwhile, residential fixed investment and exports were the negative factors for the economy.
Additionally, consumer spending, which accounts for more than two-thirds of all economic activity, increased 3.6%. Business investment in equipment advanced 3.5%, while corporate profits rose 3.4% in the third quarter. Also, corporate profits increased 10.3% over the past one year, its best such performance since 2012.
Why Choose Growth Mutual Funds?
With the U.S. economy registering steady growth in recent times, growth funds have become a natural choice for investors, who prefer capital appreciation over the long term to dividend payouts.These funds generally invest in the assets of those companies that carry an above-average growth potential.
Here, we have selected growth funds with small market capitalization and have significant exposure to the domestic market. Small-cap funds generally have a higher risk exposure but are good choices for investors seeking diversification across different sectors. Small-cap companies have lesser international exposure and are most likely to benefit from recent economic expansion.
Buy These 5 Growth Mutual Funds
Following these improvements in the U.S. economy, investors may consider growth mutual funds. According to Morningstar, small-cap growth mutual funds have three-year annualized returns of 10.9%. Here, we have selected five growth mutual funds that have a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.
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.
Bridgeway Small-Cap Growth Fund maintains a diversified portfolio by investing a large share of its assets in small-cap companies, having impressive growth prospects. BRSGX invests in companies that are listed on the NYSE, NYSE MKT and NASDAQ.
The fund has an expense ratio of 0.94% compared with the category average of 1.28%. Moreover, BRSGX requires a minimal initial investment of $2,000. The fund has three-year annualized returns of 11.1%.
BRSGX has a Zacks Mutual Fund Rank #2. Further, John N.R. Montgomery is one of the fund managers of BRSGX since 2003.
BlackRock Small Cap Growth Fund (CSGEX - Free Report) invests a major portion of its assets in equity securities of small-cap domestic companies. According to CSGEX advisors, companies with market cap similar to those included on the Russell 2000 index are considered small cap.
The fund has an expense ratio of 0.82% compared with the category average of 1.28%. Moreover, CSGEX requires a minimal initial investment of $1,000. The fund has three-year annualized returns of 9.9%.
CSGEX has a Zacks Mutual Fund Rank #1. Further, Travis Cooke is one of the fund managers of CSGEX since 2013.
JPMorgan Dynamic Small Cap Growth A (VSCOX - Free Report) seeks appreciation of capital for the long run. VSCOX invests the bulk of its assets in equity securities of small-cap companies that either have market-cap similar to those included on the Russell 2000 Growth Index or have market-cap lower than $4 billion.
The fund has an expense ratio of 1.24% compared with the category average of 1.28%. Moreover, VSCOX requires a minimal initial investment of $1,000. The fund has three-year annualized returns of 17.6%.
VSCOX has a Zacks Mutual Fund Rank #2. Further, Eytan M. Shapiro is one of the fund managers of VSCOX since 2004.
T. Rowe Price QM US Small-Cap Growth Equity (PRDSX - Free Report) invests a huge part of its assets in securities of small-cap, growth-oriented companies. Though PRDSX primarily focuses on acquiring securities of domestic companies, it may also invest around 10% of its assets in securities of companies located in foreign countries.
The fund has an expense ratio of 0.79% compared with the category average of 1.28%. Moreover, PRDSX requires a minimal initial investment of $2,500. The fund has three-year annualized returns of 11.2%.
PRDSX has a Zacks Mutual Fund Rank #2. Further, Sudhir Nanda is the fund manager of PRDSX since 2006.
MassMutual Select Small Cap Growth Equity Fund (MSGSX - Free Report) invests a large chunk of its assets in equity securities of companies, whose market cap is similar to those included on the S&P SmallCap 600 index or the Russell 2000 index. The fund may also invest around one-fifth of its assets in foreign companies, including those engaged in emerging markets.
The fund has an expense ratio of 0.96% compared with the category average of 1.28%. Moreover, MSGSX requires a minimal initial investment of $0. The fund has three-year annualized returns of 12%.
MSGSX has a Zacks Mutual Fund Rank #1. Further, Kenneth L. Abrams is one of the fund managers of MSGSX since 2001.
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Q3 GDP Remains Steady: 5 Growth Fund Picks
U.S GDP expanded at a steady clip in the third quarter. The Trump administration’s tax cut program was the primary force that powered expansion in the third quarter. Additionally, corporate profits before interest grew highest on a yearly basis in six years.
Although, the economy encountered a few negatives, it is still on track to meet the Trump administration’s annual growth target of 3%. With the domestic economy witnessing expansion, growth mutual funds that have strong exposure in the United States have emerged as prudent investment options.
Q3 GDP Steady in Second Estimate
The second estimate of third-quarter GDP revealed that the U.S. economy expanded at an annualized pace of 3.5% during the period, unchanged from the first estimate released in October. The economy benefitted from non-residential fixed investment, PCE, federal government spending and state and local government spending, and private inventory investment. Meanwhile, residential fixed investment and exports were the negative factors for the economy.
Additionally, consumer spending, which accounts for more than two-thirds of all economic activity, increased 3.6%. Business investment in equipment advanced 3.5%, while corporate profits rose 3.4% in the third quarter. Also, corporate profits increased 10.3% over the past one year, its best such performance since 2012.
Why Choose Growth Mutual Funds?
With the U.S. economy registering steady growth in recent times, growth funds have become a natural choice for investors, who prefer capital appreciation over the long term to dividend payouts.These funds generally invest in the assets of those companies that carry an above-average growth potential.
Here, we have selected growth funds with small market capitalization and have significant exposure to the domestic market. Small-cap funds generally have a higher risk exposure but are good choices for investors seeking diversification across different sectors. Small-cap companies have lesser international exposure and are most likely to benefit from recent economic expansion.
Buy These 5 Growth Mutual Funds
Following these improvements in the U.S. economy, investors may consider growth mutual funds. According to Morningstar, small-cap growth mutual funds have three-year annualized returns of 10.9%. Here, we have selected five growth mutual funds that have a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.
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.
Bridgeway Small-Cap Growth Fund maintains a diversified portfolio by investing a large share of its assets in small-cap companies, having impressive growth prospects. BRSGX invests in companies that are listed on the NYSE, NYSE MKT and NASDAQ.
The fund has an expense ratio of 0.94% compared with the category average of 1.28%. Moreover, BRSGX requires a minimal initial investment of $2,000. The fund has three-year annualized returns of 11.1%.
BRSGX has a Zacks Mutual Fund Rank #2. Further, John N.R. Montgomery is one of the fund managers of BRSGX since 2003.
BlackRock Small Cap Growth Fund (CSGEX - Free Report) invests a major portion of its assets in equity securities of small-cap domestic companies. According to CSGEX advisors, companies with market cap similar to those included on the Russell 2000 index are considered small cap.
The fund has an expense ratio of 0.82% compared with the category average of 1.28%. Moreover, CSGEX requires a minimal initial investment of $1,000. The fund has three-year annualized returns of 9.9%.
CSGEX has a Zacks Mutual Fund Rank #1. Further, Travis Cooke is one of the fund managers of CSGEX since 2013.
JPMorgan Dynamic Small Cap Growth A (VSCOX - Free Report) seeks appreciation of capital for the long run. VSCOX invests the bulk of its assets in equity securities of small-cap companies that either have market-cap similar to those included on the Russell 2000 Growth Index or have market-cap lower than $4 billion.
The fund has an expense ratio of 1.24% compared with the category average of 1.28%. Moreover, VSCOX requires a minimal initial investment of $1,000. The fund has three-year annualized returns of 17.6%.
VSCOX has a Zacks Mutual Fund Rank #2. Further, Eytan M. Shapiro is one of the fund managers of VSCOX since 2004.
T. Rowe Price QM US Small-Cap Growth Equity (PRDSX - Free Report) invests a huge part of its assets in securities of small-cap, growth-oriented companies. Though PRDSX primarily focuses on acquiring securities of domestic companies, it may also invest around 10% of its assets in securities of companies located in foreign countries.
The fund has an expense ratio of 0.79% compared with the category average of 1.28%. Moreover, PRDSX requires a minimal initial investment of $2,500. The fund has three-year annualized returns of 11.2%.
PRDSX has a Zacks Mutual Fund Rank #2. Further, Sudhir Nanda is the fund manager of PRDSX since 2006.
MassMutual Select Small Cap Growth Equity Fund (MSGSX - Free Report) invests a large chunk of its assets in equity securities of companies, whose market cap is similar to those included on the S&P SmallCap 600 index or the Russell 2000 index. The fund may also invest around one-fifth of its assets in foreign companies, including those engaged in emerging markets.
The fund has an expense ratio of 0.96% compared with the category average of 1.28%. Moreover, MSGSX requires a minimal initial investment of $0. The fund has three-year annualized returns of 12%.
MSGSX has a Zacks Mutual Fund Rank #1. Further, Kenneth L. Abrams is one of the fund managers of MSGSX since 2001.
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 >>