3 Solid Growth Funds to Buy as Fed Signals Multiple Rates Cuts
Signs of recession are ebbing and the U.S. economy looks to be in a lot better position than it was believed to be. Also, investors are regaining confidence as the Federal Reserve indicated that rate cuts will begin soon.
The Federal Reserve, which concluded its March FOMC meeting last week, left its benchmark policy rate unchanged in the range of 5.25-5.5%, which it has held steady since July 2023.
More importantly, the Federal Reserve said that it still plans at least three 25-basis point rate cuts by the end of this year, which will also be the first reduction since March 2020.
The projection of three interest rate cuts came from the Fed's "dot plot," which is a closely monitored matrix of anonymous forecasts from the 19 officials who make up the FOMC. Although the Federal Reserve did not provide the timing of the rate cuts, market participants believe that the first reduction will come in June.
Wall Street has been bullish following the announcement, with the Dow closing 2% higher for the week, recording its best week since December 2023. The S&P 500 and the Nasdaq closed 2.3% and 2.9% up, respectively, last week.
Also, the U.S. economy is on solid ground. The economy grew 3.3% at an annualized pace in the fourth quarter of 2023 and 2.5% last year.
The positive sentiment of investors has spilled over into this year, with all three major indexes having hit record highs in the first quarter. Lower interest rates bode well for the broader economy as well as growth stocks.
3 Best Choices
We have, thus, selected three large-cap mutual funds, namely Fidelity Series Blue Chip Growth Fund FSBDX, T. Rowe Price Lrg Cp Gr I TRLGX and Janus Henderson Research A JRAAX, carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain. Moreover, these funds have encouraging three and five-year 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 in identifying potential winners and losers. Unlike most 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).
Fidelity Series Blue Chip Growth Fund invests in common stocks of blue-chip companies that generally have large or medium-market capitalizations. FSBDX is non-diversified.
Fidelity Series Blue Chip Growth Fund (has a track of positive total returns for over 10 years. Specifically, FSBDX’s returns over the three and five-year benchmarks are 9.5% and 21.2%, respectively. The annual expense ratio of 0% is lower than the category average of 0.99%. FSBDX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
T. Rowe Price Lrg Cp Gr I fund seeks to provide long-term capital appreciation through investments in common stocks of growth companies. TRLGX normally invests at least 80% of net assets in the common stocks of large companies.
T. Rowe Price Lrg Cp Gr I fund has a track of positive total returns for over 10 years. Specifically, TRLGX’s returns over the three and five-year benchmarks are 7.7% and 15.3%, respectively. The annual expense ratio of 0.56% is lower than the category average of 0.95%. TRGLX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Janus Henderson Research A fund is part of the Large Cap Growth mutual fund category. JRAAX invests in many large U.S. companies that are expected to grow much faster than the other large-cap stocks.
Janus Henderson Research A fund has had a track of positive total returns for over 10 years. Specifically, JRAAX’s returns over the three and five-year benchmarks are 10.7% and 16.2%, respectively. The fund’s annual expense ratio is 0.81%. JRAAX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
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