4 Aggressive Growth Funds to Add to Your Portfolio in 2021

Zacks Equity Research
·5-min read

It was a rollercoaster ride for investors last year. The pandemic constantly created challenges and pushed traders to opt for hedge funds or the yellow metal for safe keeping of money. As we entered a new year, the easing pandemic woes, with vaccine rollout and drop in new cases, are helping economies rebound. Additionally, fiscal packages provided by the government and central banks’ decision to keep interest rate near zero is supporting economies.

Economic data released in the past month points toward U.S. economic growth. On Mar 1, the Institute for Supply Management (ISM) reported that the U.S. manufacturing Purchasing Managers' Index (PMI) hit a three-year high of 60.8% in February. February’s figure surpassed the consensus estimate of 58.7%. In fact, ISM’s manufacturing PMI is now just 0.6% shy of the previous high recorded in May 2004 of 61.4%.

Biden’s administration had provided a $600 stimulus check for American households in January that had lifted consumer confidence in the pervious months. Consumers are the drivers of the American economy and the confidence index hit a three-month high of 91.3 in February. In the last week of February, the Commerce Department reported that consumer spending jumped 2.4% in January. And the Bureau of Economic Analysis reported a 10% jump in personal income in January, the largest rise since last April.

Additionally, the economy kept afloat last year as some businesses benefited from stay-and-work-from-home practices. Lockdowns and social-distancing norms pushed businesses to adjust and adapt to the new digital and cloud-based world. Hence, some of the megatrends from last year are likely to continue while others get the opportunity to emerge. As the economy is poised to grow and recover from the pandemic slump, traders should opt for aggressive growth funds.

Why Aggressive Growth Funds?

Investors who aim for high capital growth can invest in aggressive growth mutual funds. These funds have significant exposure to companies that have potential for high growth, consequently offering the risk of greater instability in share price performances. Additionally, these funds invest in IPOs, volatile securities and undervalued stocks in order to generate high returns. The fund managers select companies for portfolios based on profitability and growth potential.

Given the current market scenario, it is apt for investors to put money into such funds because the central bank will be keeping rates near zero to help the economy recover and speed up inflation.

4 Fund to Buy Now

We have selected four best-performing aggressive growth mutual funds that investors can consider adding to your portfolio. These funds either carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have provided encouraging three-year annualized returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify the potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on the fund’s past performance but also on its likely future success.

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 Select Semiconductors Portfolio FSELX fund aims for capital appreciation. The non-diversified fund invests majority of assets in securities of companies principally engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FSELX has three-year annualized return of 27.9%.

This Zacks sector – Tech fund has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSELX has an annual expense ratio of 0.72% versus the category average of 1.24%.

Fidelity Blue Chip Growth Fund FBGRX seeks capital appreciation. The fund invests majority of assets in blue-chip companies. The fund, which focuses primarily on established and well-known companies, invests in securities of both U.S. and non-U.S. issuers. FBGRX has returned 29.8% in the past three years.

This Zacks sector – Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FBGRX has an annual expense ratio of 0.79% versus the category average of 1.04%.

Fidelity Select Technology Portfolio FSPTX fund aims for capital appreciation. It invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. FSPTX has returned 31.1% in the past three years.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSPTX has an annual expense ratio of 0.71% versus the category average of 1.24%. 

Franklin DynaTech Fund Class A FKDNX aims for capital appreciation. The fund invests in common stocks of companies that its manager believes are leaders in innovation, have superior management, and benefit from new industry conditions in a dynamically changing global economy. FKDNX has returned 30.3% in the past three years.

This Zacks sector – Tech fund has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FKDNX has an annual expense ratio of 0.85% versus the category average of 1.04%. 

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