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4 Funds to Buy on Rising U.S. Mutual Fund Inflows

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Investors are increasingly finding safe havens in domestic equity mutual funds. As concerns over global growth slowdown mount, investors are turning to domestic mutual funds for less riskier yet profitable investments.

Per the data released by the Investment Company Institute on Mar 27, American investors put a whopping $1.5 billion into domestic equity mutual funds and exchange-traded funds in the week ended Mar 22. Overall, domestic stock funds gained about $14.2 billion during the second and third week of March. This marks the largest two-week inflow into domestic stock funds since late January 2018, per a Reuters report.

Assets in U.S. mutual funds grew 9% in the first two months of 2019, per Cerulli Associates. Net inflows in U.S. mutual funds contributed to the impressive growth. Inflows were $36.7 billion in January and $29.2 billion in February, the Boston-based research firm cited.

What is leading to this inflow? First, friendly monetary policies by central banks around the world are limiting downside for stocks, which could save them from incurring drastic losses.

Second, semiconductor stocks are gaining from a revival in iPhone sales, an uptick in demand for chips and fast progression of new technologies. Third, tech giants such as Amazon, Apple, Microsoft and Facebook have recovered from their late-December lows and could be poised to move higher.

Therefore, this might be the right time to invest in a couple of U.S. mutual funds for good returns.

Our Choices

We have selected four mutual funds for your portfolio that largely invest in U.S.-based companies. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5,000.

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.

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).

DFA U.S. Targeted Value Portfolio Class R1 (DFTVX - Free Report) seeks long-term capital appreciation. The fund mostly invests in a diverse group of securities of U.S. small- and mid-cap companies. The fund’s advisor determines whether the securities the fund invests in are value stocks with higher profitability or not.

This Sector – Small Cap Value 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.

DFTVX has a Zacks Rank #1 and an annual expense ratio of 0.47%, which is below the category average of 1.21%. The fund has three and five-year returns of 12.8% and 5.6% respectively.The fund has no minimum initial investment.

American Century Equity Growth Fund Investor Class BEQGX aims for long-term capital appreciation by investing in common stocks of companies. Usually, under general market conditions, the majority of the fund’s assets will be invested in equity securities. The fund mostly invests in large-cap U.S. companies (those with market capitalization more than $2 billion) that the portfolio managers believe provide an optimal balance between expected return and risk.

This Sector – Large Cap Blend 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.

BEQGX has a Zacks Rank #1 and an annual expense ratio of 0.66%, which is below the category average of 0.95%. The fund has three and five-year returns of 14.5% and 8.8% respectively.The fund has a minimum initial investment of $2500.

DFA Tax Managed U.S. Equity Portfolio DTMEX aims for long-term capital growth by investing the majority of its net assets in securities of U.S. companies. The fund uses a market capitalization weighted approach, thereby purchasing a diverse group of U.S. company securities.

This Sector – Large Cap Blend 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.

DTMEX has a Zacks Rank #1 and an annual expense ratio of 0.22%, which is below the category average of 0.95%. The fund has three and five-year returns of 15.4% and 10.1% respectively.The fund has no minimum initial investment.

Franklin Growth Fund Advisor Class FCGAX seeks capital growth. The fund invests a significant part of its assets in equity securities of companies that are leaders in their respective industries. The fund invests a substantial amount in common stocks of U.S.-based large- and mid-cap companies. The fund may also invest in emerging industries where growth is anticipated to be more than average. The fund may invest up to 25% of its net assets in smaller companies. 

This Sector – Large 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.

FCGAX has a Zacks Rank #2 and an annual expense ratio of 0.59%, which is below the category average of 1.07%. The fund has three and five-year returns of 17.3% and 11.8% respectively.The fund has no minimum initial investment.

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