3 Large-Cap Growth Funds to Gain From Ongoing Wall Street Rally
Wall Street has broken the September jinx. Although markets had a rough start to September, historically considered the worst month for stocks, all three major indexes ended the month higher. The S&P 500, Dow and Nasdaq closed higher by 2%, 1.9% and 2.7%, respectively, for the month.
On Monday, Federal Reserve Chairman Jerome Powell said that more rate cuts could be forthcoming. Powell’s comments further fueled the rally, with the S&P 500 closing at a record high of 5,762.48 points.
Given this positive sentiment, investing in large-cap growth funds would be an ideal choice. Three such funds are Fidelity Series Blue Chip Growth Fund FSBDX, Janus Henderson Research A JRAAX and JPMorgan U.S. GARP Equity I JPGSX.
More Rate Cuts to Boost Growth Stocks
The Federal Reserve announced a 50-basis-point rate cut in its September FOMC meeting for the first time since March 2020. Market participants had been expecting a 25-basis-point rate cut, but a half-percentage-point rate cut has given a boost to the investors’ confidence.
The benchmark policy rate is currently in the 4.7-5% range, the lowest level since April 2023. According to the Fed's latest dot-plot, the federal funds rate is expected to fall to 4.25-4.5% by the end of this year, followed by a projected decrease of one percentage point in 2025 and an additional half-point reduction in 2026. This would bring the rate down to a final range of 2.75% to 3%.
A rate cut of any size bodes for the overall economy, particularly benefiting growth-focused assets like those in the technology and consumer discretionary sectors. These assets typically have an inverse relationship with market interest rates. As rates decrease, the value of these assets tends to increase since the cost of holding non-yielding assets, such as consumer discretionary stocks, becomes lower.
Large-Cap Growth Funds With Upside
We have selected three large-cap growth funds that are poised to gain from the above factors. Moreover, these funds have encouraging three and five-year returns. 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 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).
Fidelity Series Blue Chip Growth Fund invests in common stocks of blue-chip companies that generally have large or medium-market capitalization. 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 7.8% and 22.3%, respectively. FSBDX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.01%.
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 8.5% and 16.8%, respectively. JRAAX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.83%.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
JPMorgan U.S. GARP Equity I fund seeks long-term growth of capital. Under normal circumstances, JPGSX invests at least 80% of its assets in equity investments of large- and mid-capitalization U.S. companies.
JPMorgan U.S. GARP Equity I fund has had a track of positive total returns for over 10 years. Specifically, JPGSX returns over the three and five-year benchmarks are 10.5% and 18.5%, respectively. JPGSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.59%.
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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