4 Best Aggressive Growth Mutual Funds For 2020
Zacks Investment Research | Jan 23, 2020 09:56PM ET
The current phase of stock market rally, which began around March 2009, is the best in history. The Nasdaq alone has total returns of more than 500% from lows the market had hit in 2009.
The bull market turned 10 this year in March and Wall Street pundits expect the rally to continue in 2020, on the back of an accommodative monetary policy adopted by the Federal Reserve as well as strong fundamentals of the U.S. economy.
Notably, this is also the longest phase of economic expansion in U.S. history, now in its 11th year. The current cycle of economic expansion which began around June 2009 has easily outdone the record 120-month expansion in the period between March 1991 and March 2001, per the National Bureau of Economic Research.
Economists have attributed this to President Trump’s landmark tax cut of 2018 as well as supportive business regulations.
Per the latest report from the Institute of Supply Management (ISM) on Jan 7, its service index came in at 55% in December, surpassing the consensus estimate of 54.5%. The metric also surpassed its reading of 53.9% in November.
Further, service-oriented firms reported growth in the month and boosted the overall service activity in the country. The rise was supported by improving conditions on the trade war front, coupled with excellent holiday sales.
Anthony Nieves, chair of The Institute for Supply Management stated that, “The respondents are positive about the potential resolution on tariffs; however, respondents continue to have difficulty with labor resources.”
President Donald Trump’s top economic advisor, Larry Kudlow, told CNBC on Tuesday that GDP growth in the U.S. should hit at least 3% in 2020.
“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” said Kudlow, National Economic Council director. “You’ve gone from 1.5% to 2% growth. We had it going at almost 4%, then the Fed tightened.”
“We’re now down to 2.5% to 3%. I’m looking for faster growth: I think we’re going to get 3% this year,” he added. “The trade deals will help, the Fed changed policy — that was very, very important.”
Why Invest in Aggressive Growth Funds?
Aggressive growth mutual funds are ideal for investors seeking high capital growth. These funds mostly invest in companies that have potential for high growth, thus offering the risk of greater instability in share price performances. These funds also invest in IPOs, volatile securities and undervalued stocks in order to generate high returns. The fund advisor chooses the securities for purchase based on their profitability and growth potential.
The current market scenario is apt for such investments because a likely rate cut by the central bank could boost Wall Street ahead.
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: Zacks Investment Research
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