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Patient approach towards rate hike this year by the Fed is one of the latest developments that are keeping traders all the more upbeat about the New York Stock Exchange.
Recession fears, in the meantime, loom large. However, it has been seen that initial periods before recession do give handsome returns. Thus, it’s imperative for investors to bet on small-cap growth mutual funds. These funds not only add diversity to investor portfolio but also generate better gains against mid-cap and large-cap funds as they have higher growth potential than the other two.
Small-Cap Funds Poised for Gains
Small-cap funds comprise equity securities of small-cap companies. These businesses, by virtue of their nature, are primarily based in the United States and therefore have less exposure to macroeconomic issues such as the ongoing U.S.-China trade dispute and global slowdown fears.
In addition, the Federal Reserve is set to follow a patient path given that the U.S. economy is in good shape but there is also a darkening global economic outlook. At the same time, the Fed will remain patient amid inflation concerns remaining largely muted.
The volatility in U.S. equity markets is likely to tone down in the near future, given the Fed’s patient approach toward monetary policy decisions.
Growth Projections for 2019
UBS, the largest global wealth manager, advised that investors should stay invested in the stock market in 2019 regardless of their risk-undertaking capabilities.
Mark Haefele, global chief investment officer at UBS Global Wealth Management,said on Jan 14, "The period of 18 months to 6 months before a recession is often when you get most of your returns because that's when economies do strongly.”
Since small-cap stocks offer greater scope of higher returns compared to large-cap stocks, investing in small-cap mutual funds could be profitable.
4 Small Cap Growth Mutual Funds to Buy
Given the encouraging factors that could affect equity markets this year, small-cap mutual funds that have good earnings growth could prove to be great additions to your portfolio at present.
We have, thus, selected small-cap growth mutual funds that can make the most of the favorable market conditions. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform 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.
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).
T. Rowe Price New Horizons Fund (PRNHX - Free Report) seeks long-term capital growth by investing in securities of small-cap companies with the prospect of strong earnings growth.
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.
PRNHXhas an annual expense ratio of 0.78%, which is below the category average of 1.20%. The fund has three and five-year returns of 13.82% and 10.33%, respectively
Clearbridge Small Cap Growth Fund Cl A (SASMX - Free Report) seeks long-term capital growth by investing 80% of its net assets in equity securities of small-cap companies. The fund uses a growth-oriented investment style that focuses on small U.S. companies.
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.
SASMXhas an annual expense ratio of 1.19%, which is below the category average of 1.22%. The fund has three and five-year returns of 11.24% and 6.23%, respectively.
Lord Abbett Developing Growth Fund Inc. Class P (LADPX - Free Report) seeks long-term capital growth by investing in developing growth companies. The fund invests in companies that demonstrate long-term growth potential.
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.
LADPXhas an annual expense ratio of 0.97%, which is below the category average of 1.22%. The fund has three and five-year returns of 9.88% and 4.54%, respectively.
Loomis Sayles Small Cap Growth Fund Retail Class (LCGRX - Free Report) seeks long-term capital appreciation by investing 80% of its net assets in securities of small-cap companies.
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.
LCGRXhas an annual expense ratio of 1.19%, which is below the category average of 1.22%. The fund has three and five-year returns of 10.19% and 6.34%, respectively.
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4 Small-Cap Growth Mutual Funds for 2019
Patient approach towards rate hike this year by the Fed is one of the latest developments that are keeping traders all the more upbeat about the New York Stock Exchange.
Recession fears, in the meantime, loom large. However, it has been seen that initial periods before recession do give handsome returns. Thus, it’s imperative for investors to bet on small-cap growth mutual funds. These funds not only add diversity to investor portfolio but also generate better gains against mid-cap and large-cap funds as they have higher growth potential than the other two.
Small-Cap Funds Poised for Gains
Small-cap funds comprise equity securities of small-cap companies. These businesses, by virtue of their nature, are primarily based in the United States and therefore have less exposure to macroeconomic issues such as the ongoing U.S.-China trade dispute and global slowdown fears.
In addition, the Federal Reserve is set to follow a patient path given that the U.S. economy is in good shape but there is also a darkening global economic outlook. At the same time, the Fed will remain patient amid inflation concerns remaining largely muted.
The volatility in U.S. equity markets is likely to tone down in the near future, given the Fed’s patient approach toward monetary policy decisions.
Growth Projections for 2019
UBS, the largest global wealth manager, advised that investors should stay invested in the stock market in 2019 regardless of their risk-undertaking capabilities.
Mark Haefele, global chief investment officer at UBS Global Wealth Management,said on Jan 14, "The period of 18 months to 6 months before a recession is often when you get most of your returns because that's when economies do strongly.”
Since small-cap stocks offer greater scope of higher returns compared to large-cap stocks, investing in small-cap mutual funds could be profitable.
4 Small Cap Growth Mutual Funds to Buy
Given the encouraging factors that could affect equity markets this year, small-cap mutual funds that have good earnings growth could prove to be great additions to your portfolio at present.
We have, thus, selected small-cap growth mutual funds that can make the most of the favorable market conditions. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform 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.
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).
T. Rowe Price New Horizons Fund (PRNHX - Free Report) seeks long-term capital growth by investing in securities of small-cap companies with the prospect of strong earnings growth.
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.
PRNHXhas an annual expense ratio of 0.78%, which is below the category average of 1.20%. The fund has three and five-year returns of 13.82% and 10.33%, respectively
Clearbridge Small Cap Growth Fund Cl A (SASMX - Free Report) seeks long-term capital growth by investing 80% of its net assets in equity securities of small-cap companies. The fund uses a growth-oriented investment style that focuses on small U.S. companies.
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.
SASMXhas an annual expense ratio of 1.19%, which is below the category average of 1.22%. The fund has three and five-year returns of 11.24% and 6.23%, respectively.
Lord Abbett Developing Growth Fund Inc. Class P (LADPX - Free Report) seeks long-term capital growth by investing in developing growth companies. The fund invests in companies that demonstrate long-term growth potential.
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.
LADPXhas an annual expense ratio of 0.97%, which is below the category average of 1.22%. The fund has three and five-year returns of 9.88% and 4.54%, respectively.
Loomis Sayles Small Cap Growth Fund Retail Class (LCGRX - Free Report) seeks long-term capital appreciation by investing 80% of its net assets in securities of small-cap companies.
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.
LCGRXhas an annual expense ratio of 1.19%, which is below the category average of 1.22%. The fund has three and five-year returns of 10.19% and 6.34%, respectively.
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 >>