3 Large-Cap Growth Funds to Buy as Inflation Cools in April

Inflation has been a major concern lately as uncertainty has been growing over the Federal Reserve's timing of rate cuts. However, much to consumers' relief, inflation finally eased in April after moving north in the first months of the year.

The Labor Department reported on May 15 that the consumer price index rose 0.3% month over month in April, below the consensus estimate of a rise of 0.4%. The year-over-year rise was 3.4%, which came in line with analysts' expectations.

Core CPI, which excludes the volatile food and energy prices, jumped 3.6% in April from year-ago levels and 0.3% sequentially, both in line with estimates. The core year-over-year reading was the lowest since April.

Economic growth slowed in the first quarter as inflation resumed its climb after declining sharply through 2023. The U.S. GDP grew a meager 1.6% in the first quarter compared to 3.4% in the final quarter of 2023.

Rising inflation raised concerns that the Federal Reserve could delay its rate cuts. Markets rallied following the release of the CPI data, with all three major indexes — the Dow, the S&P 500 and the Nasdaq — closing at new all-time highs.

The fresh inflation data has also renewed optimism surrounding rate cuts, which market participants believe could start in June.

Also, the Federal Reserve said after its last FOMC meeting that it is unlikely that there would be further interest rate hike. Lower borrowing rates bode well for growth stocks and the broader economy.

3 Best Choices

We have, thus, selected three large-cap mutual funds such as Fidelity Series Blue Chip Growth Fund FSBDX, Janus Henderson Research A (NASDAQ: JRAAX) and T. Rowe Price Blue Chip Growth TRBCX, carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), that are poised to gain from such 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.

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 7.1% and 19.2%, respectively. FSBDX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.01%.

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 7.7% and 14.4%, respectively. The fund's annual expense ratio is 0.81%. JRAAX has a Zacks Mutual Fund Rank #1.

T. Rowe Price Blue Chip Growth fund seeks long-term capital growth. TRBCX invests at least 80% of net assets in common stocks of large and medium-sized, blue-chip companies that have the potential for above-average growth in earnings and are well-established in their respective industries.

T. Rowe Price Blue Chip Growth fund has a track of positive total returns for over 10 years. Specifically, TRBCX's returns over the three and five-year benchmarks are 3.1% and 11.4%, respectively. The fund has an annual expense ratio of 0.70%. TRBCX has a Zacks Mutual Fund Rank #1.

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