4 Mid-Cap Growth Funds To Buy As Trump Completes One Month

After a brief period of uncertainty following President Trump’s surprise win, investors reaffirmed their faith in the promises of the new administration. Optimism over Trump’s proposed market-friendly policies including tax cuts, financial de-regulation, increase in infrastructure spending and job creations boosted all the key indexes during the first month of his presidency.

During this period, the S&P 500 gained 3.5%, registering its best performance since 1997, when Bill Clinton won his second term. The S&P MidCap 400 gained 3.6% during the same period, better than the S&P 500’s performance. Following recent gains by the benchmark mid-cap index, adding mid-cap growth mutual funds to one’s portfolio might be a suitable investment option.

What Drove the Mid-Cap Index Higher?

Domestic Economy in Focus

In his victory speech, Trump said that the current economic growth pace of 2% will be doubled and almost 25 million jobs will be created in the coming 10 years. At a press conference on Feb 16, Trump talked about recent market gains and said that they were “good for jobs.”

Further, Trump said that he will not only boost military spending but will also revive the domestic manufacturing sector. Also, Trump’s deregulation proposals and domestic-focused policies are likely to boost the domestic economy’s pace of growth.

Tax Cuts and Higher Infrastructure Spending

Recently, in a meeting with some major U.S. airline executives President Trump said his administration will be "lowering the overall tax burden on American business.”Trump added that he will announce a “phenomenal” tax plan, which invariably added to the optimism in the markets.

In contrast to large-cap companies which generate more than 30% of their sales from abroad, mid-cap companies generate more than 80% of their revenues from domestic operations. So, Trump's move to trim corporate tax rate to 15% from 35% and relax regulations is expected to benefit mid caps.

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