4 Small-Cap Growth Mutual Funds For 2019

Patient approach towards rate hike this year by the Fed is one of the latest developments that are keeping traders all the more upbeat about the New York Stock Exchange.

Recession fears, in the meantime, loom large. However, it has been seen that initial periods before recession do give handsome returns. Thus, it’s imperative for investors to bet on small-cap growth mutual funds. These funds not only add diversity to investor portfolio but also generate better gains against mid-cap and large-cap funds as they have higher growth potential than the other two.

Small-Cap Funds Poised for Gains

Small-cap funds comprise equity securities of small-cap companies. These businesses, by virtue of their nature, are primarily based in the United States and therefore have less exposure to macroeconomic issues such as the ongoing U.S.-China trade dispute and global slowdown fears.

In addition, the Federal Reserve is set to follow a patient path given that the U.S. economy is in good shape but there is also a darkening global economic outlook. At the same time, the Fed will remain patient amid inflation concerns remaining largely muted.

The volatility in U.S. equity markets is likely to tone down in the near future, given the Fed’s patient approach toward monetary policy decisions.

Growth Projections for 2019                     

UBS, the largest global wealth manager, advised that investors should stay invested in the stock market in 2019 regardless of their risk-undertaking capabilities.  

Mark Haefele, global chief investment officer at UBS Global Wealth Management, said on Jan 14, "The period of 18 months to 6 months before a recession is often when you get most of your returns because that's when economies do strongly.”

Since small-cap stocks offer a greater scope of higher returns compared to large-cap stocks, investing in small-cap mutual funds could be profitable.

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