Small-Stock Mutual Funds Keep Growing
NEW YORK ( TheStreet ) -- Small growth stocks have climbed sharply lately, as have the mutual funds that invest in them.
The average small growth mutual fund returned 25.2% this year, compared to 17.8% for the S&P 500, according to Morningstar.
Despite concerns about the Federal Reserve's tapering plans, many small growth mutual funds have continued rallying in recent weeks. During the past month, Buffalo Emerging Opportunities (BUFOX) gained 2.0%, and MFS New Discovery (MNDAX) returned 2.8%. In contrast, the S&P 500 lost 2.2%.
A variety of factors are lifting small growth funds. For starters, the recovering economy is providing a special boost for small stocks. As investors gain more confidence that the economy can avoid recession, they are shifting to riskier small stocks that seem poised to increase sales.In addition, the small stocks seem well positioned to survive the turbulence that could be caused by Federal Reserve's tapering program.
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