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3 Top Mutual Funds to Gain on Strong Consumer Spending
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Major U.S. indexes witnessed a winning spree till August. The downgrading of small and medium-sized lenders and the risk of a potential downgrade for six banks citing funding risks and weaker profitability have created panic among investors. However, better-than-expected retail sales in July due to increased online purchases, as well as food and beverage services suggest that the economy expanded in early third quarter.
On Aug 15, the Commerce Department reported that retail sales jumped 0.7% in July as inflation slowed. However, the number doesn't account for inflation but merely represents consumers' ability to adapt to the price increase, which was much more prevalent over the last couple of years.
The Consumer Price Index for July rose slightly to 3.2% year on year, way less than the 9.1% it had touched last summer. The Federal Reserve's aggressive monetary policy tightening has begun to show results after a series of 11 rate hikes since March 2022. However, the Fed's 2% inflation target looks distant.
For the month of July, the U.S. non-farm payroll increased by 187,000, unemployment rates declined to 3.5%, and average hourly wage rates gained by 0.4%. The numbers suggest that the labor market is still tight, boosting consumer spending.
Robust retail sales numbers indicate that consumer spending was broad-based. We have selected three consumer discretionary mutual funds that have companies selling discretionary items involved in leisure activities, as well as retailers expected to perform well shortly. Thus, prudent investors can gain from such an opportunity and earn attractive returns.
These funds, by the way, have given positive 3-year and 5-year returns as well, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio compared to the category average.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests the majority of its assets in common stocks of domestic and foreign companies that are principally engaged in the design, production, or distribution of goods or services related to leisure industries. FDLSXadvisors generally use fundamental analysis factors like the company's financial performance, industry position, as well as market and economic conditions to select investments.
Kevin Francfort has been the lead manager of FDLSX since Sep 7, 2022, and most of the fund's exposure is in companies such as McDonald's (18.0%), Bookings Holdings (10.2) and Hilton Worldwide (7.5%) as of 5/31/2023.
FDLSX's three-year and five-year annualized returns are 21.0% and 12.7%, respectively. FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is less than the category average of 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) seeks to achieve its objective by investing the maximum portion of its net assets in common stocks of domestic and foreign companies that are principally engaged in the manufacture and distribution of consumer discretionary products and services. FSCPX advisors choose to invest in stocks considering fundamental analysis factors like the company's financial performance, industry position as well as market and economic conditions to select investments.
Jordan Michaels has been the lead manager of FSCPX since Jul 11, 2022, and most of the fund's exposure is in companies like Amazon.com (24.9%), Tesla (12.8%) and Home Depot (4.82%) as of 5/31/2023.
FSCPX's three-year and five-year annualized returns are 8.4% and 9.6%, respectively. FSCPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76% compared to the category average of 0.79%.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) invests most of its net assets in common stocks of domestic and foreign companies that are engaged in merchandising finished goods and services primarily to individual consumers. FSRPX uses a fundamental analysis approach like company's financial performance, industry position as well as market and economic conditions to select investments to select investment
Boris Shepov has been the lead manager of FSRPX since May 15, 2018. Most of the fund's holdings were in companies like Amazon.com (27.3%), TJX Companies (6.7%) and Lowe's Companies (6.6%) as of 5/31/2023.
FSRPX's 3-year and 5-year returns are 5.9% and 9.6%, respectively. FSRPX has a Zacks Mutual Fund Rank #2 andthe annual expense ratio is 0.72% compared to the category average of 0.79%.
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3 Top Mutual Funds to Gain on Strong Consumer Spending
Major U.S. indexes witnessed a winning spree till August. The downgrading of small and medium-sized lenders and the risk of a potential downgrade for six banks citing funding risks and weaker profitability have created panic among investors. However, better-than-expected retail sales in July due to increased online purchases, as well as food and beverage services suggest that the economy expanded in early third quarter.
On Aug 15, the Commerce Department reported that retail sales jumped 0.7% in July as inflation slowed. However, the number doesn't account for inflation but merely represents consumers' ability to adapt to the price increase, which was much more prevalent over the last couple of years.
The Consumer Price Index for July rose slightly to 3.2% year on year, way less than the 9.1% it had touched last summer. The Federal Reserve's aggressive monetary policy tightening has begun to show results after a series of 11 rate hikes since March 2022. However, the Fed's 2% inflation target looks distant.
For the month of July, the U.S. non-farm payroll increased by 187,000, unemployment rates declined to 3.5%, and average hourly wage rates gained by 0.4%. The numbers suggest that the labor market is still tight, boosting consumer spending.
Robust retail sales numbers indicate that consumer spending was broad-based. We have selected three consumer discretionary mutual funds that have companies selling discretionary items involved in leisure activities, as well as retailers expected to perform well shortly. Thus, prudent investors can gain from such an opportunity and earn attractive returns.
Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These funds, by the way, have given positive 3-year and 5-year returns as well, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio compared to the category average.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests the majority of its assets in common stocks of domestic and foreign companies that are principally engaged in the design, production, or distribution of goods or services related to leisure industries. FDLSXadvisors generally use fundamental analysis factors like the company's financial performance, industry position, as well as market and economic conditions to select investments.
Kevin Francfort has been the lead manager of FDLSX since Sep 7, 2022, and most of the fund's exposure is in companies such as McDonald's (18.0%), Bookings Holdings (10.2) and Hilton Worldwide (7.5%) as of 5/31/2023.
FDLSX's three-year and five-year annualized returns are 21.0% and 12.7%, respectively. FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is less than the category average of 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) seeks to achieve its objective by investing the maximum portion of its net assets in common stocks of domestic and foreign companies that are principally engaged in the manufacture and distribution of consumer discretionary products and services. FSCPX advisors choose to invest in stocks considering fundamental analysis factors like the company's financial performance, industry position as well as market and economic conditions to select investments.
Jordan Michaels has been the lead manager of FSCPX since Jul 11, 2022, and most of the fund's exposure is in companies like Amazon.com (24.9%), Tesla (12.8%) and Home Depot (4.82%) as of 5/31/2023.
FSCPX's three-year and five-year annualized returns are 8.4% and 9.6%, respectively. FSCPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76% compared to the category average of 0.79%.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) invests most of its net assets in common stocks of domestic and foreign companies that are engaged in merchandising finished goods and services primarily to individual consumers. FSRPX uses a fundamental analysis approach like company's financial performance, industry position as well as market and economic conditions to select investments to select investment
Boris Shepov has been the lead manager of FSRPX since May 15, 2018. Most of the fund's holdings were in companies like Amazon.com (27.3%), TJX Companies (6.7%) and Lowe's Companies (6.6%) as of 5/31/2023.
FSRPX's 3-year and 5-year returns are 5.9% and 9.6%, respectively. FSRPX has a Zacks Mutual Fund Rank #2 andthe annual expense ratio is 0.72% compared to the category average of 0.79%.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>