The Consumer Price Index (CPI) data for February, which was recently issued by the Labor Department, showed that consumer prices are continuing to rise. The CPI went up by 0.4% in February, following a 0.3% increase in January. In February, core CPI, which excludes food and energy prices, also saw a 0.4% increase month on month.
The increases in consumer prices were largely influenced by gasoline costs, which rose 3.8% following a 3.3% drop in January. This significant change highlights the volatility with in energy markets. However, it bodes well for energy companies, especially those positioned to benefit from the recovery in oil prices. Additionally, housing costs, including rents, increased by 0.4% after rising 0.6% in the prior month, showing inflationary pressure in the housing sector.
Despite worries about inflation, it is widely expected that the U.S. central bank will keep interest rates unchanged. There is a 65% chance of the rate cut happening in June based on the CME FedWatch Tool data. Since March 2022 the Fed has raised its policy rate by 525 basis points to establish a range of 5.25 to 5.50%. This stability in interest rates encourages confidence in the long-term potential of growth mutual funds.
Thus, from an investment standpoint, we have selected three growth mutual funds that are expected to hedge one’s portfolio against any economic downturn and provide attractive returns. Mutual funds, in general, reduce transaction costs and diversify the portfolio without commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These mutual funds, by the way, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
BlackRock Exchange BlackRock (STSEX – Free Report) seeks to minimize capital gains by investing most of its net assets in a diversified portfolio of common stocks and convertible securities, which, according to its advisors, have high growth potential. STSEX advisors prefer to invest in large and mid-cap companies.
Phil Ruvinsky has been the lead manager of STSEX since Feb 01, 2020. Most of the fund’s holdings were in companies like Microsoft Corp (33.4%), Berkshire Hathaway Inc. (11.6%) and General Dynamics Corp. (8.8%) as of Dec 31, 2023.
STSEX’s 3-year and 5-year annualized returns are 16.1% and 16%, respectively. STSEX has a Zacks Mutual Fund Rank #1. Its net expense ratio is 0.62%.
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
Madison Mid Cap Fund (GTSGX – Free Report) invests most of its assets in mid-cap securities. GTSGX also invests in common stocks.
Rich Eisinger has been the lead manager of GTSGX since Jan 1, 1998. Most of the fund’s holdings were in companies like Arch Capital Group Ltd. (9%), Ross Stores, Inc. (5.6%) and Gartner, Inc. (5.6%) as of Oct 31, 2023.
GTSGX’s 3-year and 5-year annualized returns are 13.9% and 13.9%, respectively. GTSGX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.94%.
Eaton Vance Small-Cap (ETEGX – Free Report) invests most of its net assets in equity securities of small-cap companies. ETEGX advisors consider small-cap companies as those with market capitalization similar to or below or have a three-year average maximum market cap of companies listed in the Russell 2000 Index.
J. Griffith Noble has been the lead manager of ETEGX since Jan 29, 2015. Most of the fund’s holdings were in companies like Core & Main, Inc. (3.2%), Chemed Corp (3.1%) and Dorman Products, Inc. (2.9%) as of Dec 31, 2023.
ETEGX ‘s 3-year and 5-year returns are 3.3% and 7.8%, respectively. ETEGX has a Zacks Mutual Fund Rank #1. The annual expense ratio is 1.21%.
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