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Looking For Gains? Buy These 4 Small-Cap Growth Funds Now
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The U.S. economy advanced north of 3% in the first quarter of 2019, putting an end to speculation about a slowdown in the world’s largest economy. Further, this comes at a time the International Monetary Fund (IMF) has cautioned of a global economic downturn. Moreover, Fed Chief Jerome Powell indicated at the end of the Fed’s latest policy meeting that the central bank would continue its ‘patient’ rate-hike approach in 2019.
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 global macroeconomic issues. Moreover, these funds also generate better gains against mid-cap and large-cap funds as they have higher growth potential. Such conditions call for investing in small-cap mutual funds.
U.S. GDP Surpasses Estimates in Q1
Per the latest reports from the Bureau of Economic Analysis on Apr 26, the U.S. economy advanced at its fastest pace in past four years in the first quarter of 2019.U.S. GDP increased at 3.2% in the first quarter of 2019, surpassing the consensus estimate of 2.1%.
The figure is also higher than the 2.2% growth recorded in the last quarter of 2018. This is also the first time since 2018 that first-quarter GDP has surpassed the 3% level. Further, exports increased while imports declined in the period. Meanwhile, inventories increased from $96.8 billion to $128.4 billion in the first quarter of this year.
Impending Global Recession
On Apr 9, the IMF slashed its forecast for global economic growth for the third time in the past six months. The international lending agency expects the global economy to advance 3.3% in 2019, 0.2% lower than its estimate from January. IMF also believes that the ongoing trade war between the United States and China would prove to be a major headwind for the global economy. If the latest updates are to go by, President Donald Trump is set to slap an additional round of tariffs on Chinese goods. This comes after months of unsuccessful negotiations between both the countries.
The global body is of the view that a failure to reach an agreement and the resultant tariff barriers would result in “higher costs of imported intermediate and capital goods and higher final goods prices for consumers.”
4 Best Funds to Buy Now
Given such bullish circumstances, we have highlighted four small-cap growth mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy)and are poised to gain from such factors. Moreover, these funds have encouraging first quarter and year-to-date (YTD) returns. Additionally, 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 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).
Dreyfus/The Boston Company Small Cap Growth Fund Class I (SSETX - Free Report) seeks long-term capital growth. The fund invests the majority of its assets in equity securities of small-cap American companies. Its advisor considers those companies as smallcap whose market capitalization is less than or equal to the total market capitalization of the largest company in the Russell 2000 Growth Index.
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.
SSETX has a Zacks Mutual Fund Rank #1 an annual expense ratio of 1.00%, which is below the category average of 1.20%. The fund has three and five-year returns of 22.6% and 13.7%, respectively.
Hartford Small Cap Growth HLS IA (HISCX - Free Report) fund invests a large chunk of its assets in common stocks of small-cap companies that are expected to have impressive growth potential by the fund's sub-adviser, Wellington Management. HISCX focuses on those small-cap companies that are included on the S&P SmallCap 600 and the Russell 2000 indices.
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.
HISCX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.66%, which is below the category average of 1.20%. The fund has three and five-year returns of 15.6% and 10.2%, respectively.
JPMorgan Small Cap Growth Fund A(PGSGX - Free Report) invests a huge part of its assets in securities issued by small-cap companies. These are companies with market capitalization equivalent to those listed on the Russell 2000 Growth index stocks and below $4 billion at the time of purchase. The fund seeks capital appreciation for the long run.
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.
PGSGX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.20%, which is below the category average of 1.28%. The fund has three and five-year returns of 25.8% and 144%, 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.
LCGRX has a Zacks Mutual Fund Rank #2 an annual expense ratio of 1.19%, which is below the category average of 1.20%. The fund has three and five-year returns of 18.5% and 11.7%, respectively.
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Looking For Gains? Buy These 4 Small-Cap Growth Funds Now
The U.S. economy advanced north of 3% in the first quarter of 2019, putting an end to speculation about a slowdown in the world’s largest economy. Further, this comes at a time the International Monetary Fund (IMF) has cautioned of a global economic downturn. Moreover, Fed Chief Jerome Powell indicated at the end of the Fed’s latest policy meeting that the central bank would continue its ‘patient’ rate-hike approach in 2019.
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 global macroeconomic issues. Moreover, these funds also generate better gains against mid-cap and large-cap funds as they have higher growth potential. Such conditions call for investing in small-cap mutual funds.
U.S. GDP Surpasses Estimates in Q1
Per the latest reports from the Bureau of Economic Analysis on Apr 26, the U.S. economy advanced at its fastest pace in past four years in the first quarter of 2019.U.S. GDP increased at 3.2% in the first quarter of 2019, surpassing the consensus estimate of 2.1%.
The figure is also higher than the 2.2% growth recorded in the last quarter of 2018. This is also the first time since 2018 that first-quarter GDP has surpassed the 3% level. Further, exports increased while imports declined in the period. Meanwhile, inventories increased from $96.8 billion to $128.4 billion in the first quarter of this year.
Impending Global Recession
On Apr 9, the IMF slashed its forecast for global economic growth for the third time in the past six months. The international lending agency expects the global economy to advance 3.3% in 2019, 0.2% lower than its estimate from January. IMF also believes that the ongoing trade war between the United States and China would prove to be a major headwind for the global economy. If the latest updates are to go by, President Donald Trump is set to slap an additional round of tariffs on Chinese goods. This comes after months of unsuccessful negotiations between both the countries.
The global body is of the view that a failure to reach an agreement and the resultant tariff barriers would result in “higher costs of imported intermediate and capital goods and higher final goods prices for consumers.”
4 Best Funds to Buy Now
Given such bullish circumstances, we have highlighted four small-cap growth mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy)and are poised to gain from such factors. Moreover, these funds have encouraging first quarter and year-to-date (YTD) returns. Additionally, 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 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).
Dreyfus/The Boston Company Small Cap Growth Fund Class I (SSETX - Free Report) seeks long-term capital growth. The fund invests the majority of its assets in equity securities of small-cap American companies. Its advisor considers those companies as smallcap whose market capitalization is less than or equal to the total market capitalization of the largest company in the Russell 2000 Growth Index.
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.
SSETX has a Zacks Mutual Fund Rank #1 an annual expense ratio of 1.00%, which is below the category average of 1.20%. The fund has three and five-year returns of 22.6% and 13.7%, respectively.
Hartford Small Cap Growth HLS IA (HISCX - Free Report) fund invests a large chunk of its assets in common stocks of small-cap companies that are expected to have impressive growth potential by the fund's sub-adviser, Wellington Management. HISCX focuses on those small-cap companies that are included on the S&P SmallCap 600 and the Russell 2000 indices.
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.
HISCX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.66%, which is below the category average of 1.20%. The fund has three and five-year returns of 15.6% and 10.2%, respectively.
JPMorgan Small Cap Growth Fund A(PGSGX - Free Report) invests a huge part of its assets in securities issued by small-cap companies. These are companies with market capitalization equivalent to those listed on the Russell 2000 Growth index stocks and below $4 billion at the time of purchase. The fund seeks capital appreciation for the long run.
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.
PGSGX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.20%, which is below the category average of 1.28%. The fund has three and five-year returns of 25.8% and 144%, 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.
LCGRX has a Zacks Mutual Fund Rank #2 an annual expense ratio of 1.19%, which is below the category average of 1.20%. The fund has three and five-year returns of 18.5% and 11.7%, 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 >>