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4 Low Cost Mutual Funds to Beat Uncertain Trade Policies
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The United States is at a critical juncture on the trade front, which is resulting in turbulent markets. Therefore, opting for low cost mutual funds that don’t burn a hole in the pocket seems judicious at the moment.
Trade Uncertainties Loom Large
First, the country is gearing up to impose a 5% tariff on all Mexican imports beginning Jun 10, a White House statement cited earlier this week. Illegal migration was cited as the primary reason for the taxes. In fact, if Mexico doesn’t enact to “reduce or eliminate the number of illegal aliens,” duties could go as high as 25% in the coming months.
According to the statement, tariffs will be raised to 15% on Aug 1, to 20% on Sep 1 and to 25% on Oct 1 this year and remain unchanged at 25% till Mexico eventually stops the inflow of illegal migrants from its territory. In addition, American companies in Mexico that choose to relocate base to the United States would face no tariffs or be affected in any manner.
Mexico has requested for dialogue with U.S. in order to reach an agreement that may benefit both countries. Global shares were lower on May 31, following the announcement on May 30.
Secondly, the ongoing trade war with China has only escalated this month after a brief truce in the January-March period. What started as a trade tariff spat has now turned to a clash over technology, with the United States blacklisting hundreds of Chinese technology companies, telecom giant Huawei Technologies being notable among them.
In response, China is willing to curb its export of rare earth minerals. According to US Geological Survey, the Asian country accounted for 80% of rare earth imported by the United States in the 2014-2017 period. The prospect of a rare earth supply cut has the United States seeking alternatives, since these are vital constituents of everyday items like smart phones, power banks and batteries etc.
These growing trade conflicts could affect all participants, since consumers and businesses bear the price hikes in the end. Economic activity, spending and investments remain at the forefront of trade policy uncertainties.
In such a scenario, fishing out lump-sum amounts for mutual fund investments isn’t advisable. This is where low cost mutual funds come in.
Why Invest in Low Cost Mutual Funds?
Armed with their low operational costs and low to none minimum initial investments, low cost mutual funds are ideal to wait out the current market volatility induced by uncertain trade policies.
Expense ratio, which represents the entire management fees and operating costs, is a vital component to consider since it decides what a fund investor’s take-home returns are. In fact, the inclination toward mutual funds with low expense ratios has led to a stiff competition between asset management companies.
4 Best Choices
We have selected four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and have expense ratios less than 1. Moreover, these funds have encouraging year-to-date, three and five-year returns. Additionally, there is no minimum initial investment.
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.
Now we come to the second-most vital question: 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).
Putnam Sustainable Leaders Y (PNOYX - Free Report) fund aims for long-term capital growth. The fund primarily invests in common stocks of American companies of any size, especially in those that the fund’s adviser believes adhere to sustainable business practices.
This Zacks sector – All 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.
PNOYX has an annual expense ratio of 0.74%, which is below the category average of 1.07%. It has three and five-year returns of 20.4% and 14.1% respectively.It’s year-to-date return is 23.6%.
JPMorgan Growth Advantage R5 (JGVRX - Free Report) fund aims for long-term capital appreciation. The fund mostly invests in common stocks of U.S. companies of any market capitalization. While investing, the fund’s adviser tends to focus on those that he believes have strong earnings growth potential.
This Zacks 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.
JGVRX has an annual expense ratio of 0.74%, which is below the category average of 1.07%. It has three and five-year returns of 20.1% and 15.3% respectively.It’s year-to-date return is 22.6%.
Hartford Global Growth HLS IA fund aims for capital appreciation by investing in a broadly diversified portfolio of common stocks spanning across countries, companies and industries. The fund may invest the majority of its assets in common stocks of growth companies.
This Zacks sector – Global-Equity 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.
HIALX has an annual expense ratio of 0.80%, which is below the category average of 1.11%. It has three and five-year returns of 17.4% and 13.1% respectively.It’s year-to-date return is 21.8%.
Fidelity Series Opportunistic Insights (FVWSX - Free Report) fund primarily invests in common stocks of companies and seeks capital growth. The fund invests in securities of those companies whose value Fidelity Management & Research Company believes is not fully recognized by the public. FVWSX may invest in growth or value stocks or both. It may also invest in U.S. and non-U.S. issuers alike.
This Zacks 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.
FVWSX has an annual expense ratio of 0%, which is below the category average of 1.07%. It has three and five-year returns of 17.7% and 14.3% respectively.It’s year-to-date return is 21.9%.
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4 Low Cost Mutual Funds to Beat Uncertain Trade Policies
The United States is at a critical juncture on the trade front, which is resulting in turbulent markets. Therefore, opting for low cost mutual funds that don’t burn a hole in the pocket seems judicious at the moment.
Trade Uncertainties Loom Large
First, the country is gearing up to impose a 5% tariff on all Mexican imports beginning Jun 10, a White House statement cited earlier this week. Illegal migration was cited as the primary reason for the taxes. In fact, if Mexico doesn’t enact to “reduce or eliminate the number of illegal aliens,” duties could go as high as 25% in the coming months.
According to the statement, tariffs will be raised to 15% on Aug 1, to 20% on Sep 1 and to 25% on Oct 1 this year and remain unchanged at 25% till Mexico eventually stops the inflow of illegal migrants from its territory. In addition, American companies in Mexico that choose to relocate base to the United States would face no tariffs or be affected in any manner.
Mexico has requested for dialogue with U.S. in order to reach an agreement that may benefit both countries. Global shares were lower on May 31, following the announcement on May 30.
Secondly, the ongoing trade war with China has only escalated this month after a brief truce in the January-March period. What started as a trade tariff spat has now turned to a clash over technology, with the United States blacklisting hundreds of Chinese technology companies, telecom giant Huawei Technologies being notable among them.
In response, China is willing to curb its export of rare earth minerals. According to US Geological Survey, the Asian country accounted for 80% of rare earth imported by the United States in the 2014-2017 period. The prospect of a rare earth supply cut has the United States seeking alternatives, since these are vital constituents of everyday items like smart phones, power banks and batteries etc.
These growing trade conflicts could affect all participants, since consumers and businesses bear the price hikes in the end. Economic activity, spending and investments remain at the forefront of trade policy uncertainties.
In such a scenario, fishing out lump-sum amounts for mutual fund investments isn’t advisable. This is where low cost mutual funds come in.
Why Invest in Low Cost Mutual Funds?
Armed with their low operational costs and low to none minimum initial investments, low cost mutual funds are ideal to wait out the current market volatility induced by uncertain trade policies.
Expense ratio, which represents the entire management fees and operating costs, is a vital component to consider since it decides what a fund investor’s take-home returns are. In fact, the inclination toward mutual funds with low expense ratios has led to a stiff competition between asset management companies.
4 Best Choices
We have selected four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and have expense ratios less than 1. Moreover, these funds have encouraging year-to-date, three and five-year returns. Additionally, there is no minimum initial investment.
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.
Now we come to the second-most vital question: 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).
Putnam Sustainable Leaders Y (PNOYX - Free Report) fund aims for long-term capital growth. The fund primarily invests in common stocks of American companies of any size, especially in those that the fund’s adviser believes adhere to sustainable business practices.
This Zacks sector – All 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.
PNOYX has an annual expense ratio of 0.74%, which is below the category average of 1.07%. It has three and five-year returns of 20.4% and 14.1% respectively.It’s year-to-date return is 23.6%.
JPMorgan Growth Advantage R5 (JGVRX - Free Report) fund aims for long-term capital appreciation. The fund mostly invests in common stocks of U.S. companies of any market capitalization. While investing, the fund’s adviser tends to focus on those that he believes have strong earnings growth potential.
This Zacks 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.
JGVRX has an annual expense ratio of 0.74%, which is below the category average of 1.07%. It has three and five-year returns of 20.1% and 15.3% respectively.It’s year-to-date return is 22.6%.
Hartford Global Growth HLS IA fund aims for capital appreciation by investing in a broadly diversified portfolio of common stocks spanning across countries, companies and industries. The fund may invest the majority of its assets in common stocks of growth companies.
This Zacks sector – Global-Equity 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.
HIALX has an annual expense ratio of 0.80%, which is below the category average of 1.11%. It has three and five-year returns of 17.4% and 13.1% respectively.It’s year-to-date return is 21.8%.
Fidelity Series Opportunistic Insights (FVWSX - Free Report) fund primarily invests in common stocks of companies and seeks capital growth. The fund invests in securities of those companies whose value Fidelity Management & Research Company believes is not fully recognized by the public. FVWSX may invest in growth or value stocks or both. It may also invest in U.S. and non-U.S. issuers alike.
This Zacks 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.
FVWSX has an annual expense ratio of 0%, which is below the category average of 1.07%. It has three and five-year returns of 17.7% and 14.3% respectively.It’s year-to-date return is 21.9%.
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 >>