Send me real-time posts from this site at my email
Zacks

2 Growth Mutual Funds You Must Add to Your Portfolio

Per the latest data from IHS Markit, its flash U.S. Composite PMI Index surged to 54.7 in August from 50.3 in the previous month. The metric increased to its highest settlement since February 2019. Furthermore, the data firm’s flash indicator for the manufacturing sector rose to its highest levels since January 2019.

On the other hand, the indicator for America’s service sector was at its highest settlement since March 2019. Any reading above 50 indicates growth. Also, IHS Markit’s flash composite new orders index rose to 54 this month, its highest since March 2019.

The readings for the manufacturing index rose to a 19-month high of 53.6 and the service sector index rose from 50 in July to 54.8 in August, marking a 17 month high. The IHS Markit report states that both manufacturing and services sectors saw a resurgence in new orders in August.

Earlier in the month, the Federal Reserve reported that total industrial production rose 3% in July and there was a 28.3% jump in production of motor vehicles and parts, while factory production elsewhere advanced 1.6%. July’s jump was mostly due to the reopening of factories as coronavirus cases declined. Meanwhile, the ISM Manufacturing Index increased to 54.2% in July from 52.6% in the previous month. The metric also surpassed the consensus estimate of 53.5% and reached its highest settlement in 15 months. A level above 50% implies that the manufacturing sector is expanding.

Furthermore, on Aug 4, the Commerce Department stated that U.S. factory orders for July rose 6.2% to $437.2 billion. On Aug 25, the U.S. Census Bureau and the Department of Housing and Urban Development jointly reported that sales of new homes grew at a rate of 901,000 in July, beating the consensus estimate of 785,000. June’s figure was also revised to 791,000, which puts July’s new home sales figure 13.9% higher. The report specifies that the pace of new home sales was the highest since 2006 and is up 36.3% from a year ago.

In fact, these reports underline the fact that the housing sector is leading the economic recovery from the coronavirus pandemic. Additionally, positive news on coronavirus vaccine trials pushed major indexes to hit all-time highs and this signals a bullish stance.

Top 2 Mutual Funds to Buy

Given such bullish circumstances, we have shortlisted two growth mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from the above-mentioned factors. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.

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 Growth Strategies Fund Class K FAGKX aims for capital appreciation. The fund invests in common stocks of companies that its managers believe offer the potential for accelerated earnings or revenue growth. It invests in domestic and foreign issuers, and focuses investments in medium-sized companies.

This Zacks All Cap Growth product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 11.2% over the past five years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FAGKXcarries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.43%, which is below the category average of 1.16%.

VALIC Company I Small-Mid Growth Fund VSSGX aims for capital growth. The fund invests primarily in common stocks selected for their growth potential and the majority of the net assets is invested in equity securities of small- and mid-cap companies located in U.S. markets.

This Zacks All Cap Growth product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the past five years is 10.9%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VSSGXcarries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.94%, which is below the category average of 1.16%.

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 >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Get Your Free (VSSGX): Fund Analysis Report
 
To read this article on Zacks.com click here.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue