We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies. In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Financial Mutual Funds to Buy on the Trump Tariff Impositions
Read MoreHide Full Article
The markets have already priced in that while the central bank would still be cutting rates in 2025, it would happen at a much slower pace than projected earlier. In September 2024, four cuts were anticipated for 2025. However, market participants are currently looking at a maximum of two such instances, which may go down further as the United States enters a phase of tariff impositions on trading partners and possible retaliations.
Interest rates, thus, will remain relatively high in the foreseeable future. When interest rates are high, banks and other financial institutions generally see higher profitability due to increased lending rates. The gap between such lending rates is considered a long-term asset for banks. Also, short-term liabilities such as deposits increase and boost net interest margins.
Stocks of banks, insurance companies and other financial institutions go up during high interest-rate periods. This is because financial services companies can earn more on the money they have and on the credit they issue to their customers. As if on cue, the S&P 500 Financials Select Sector SPDR (XLF), a benchmark for how the financial sector has been performing, has gained 8% so far in the two completed months in the calendar year.
In December 2024, the central bank projected that core inflation will hit 2.5% in 2025 before cooling to 2.2% in 2026 and 2% in 2027. With the Trump tariff policy in motion, earlier inflation projections might already be dated. This should prompt the Fed to hold interest rates high, which in turn will boost the financial sector.
For these reasons, financial mutual funds might provide much-required stability in a high-rate environment market. Hence, astute investors should consider such funds at present. 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).
We have thus selected three financial mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000 as well as carry a low expense ratio.
Davis Financial (RPFGX - Free Report) uses the Davis Investment Discipline to invest most of the fund's net assets in securities issued by companies principally engaged in the financial services sector. RPFGX invests primarily in common stocks.
Christopher Cullom Davis has been the lead manager of RPFGX since January 2014, and 92.4% of the fund is invested in the financial sector. Three top holdings for RPFGX are 10.3% in Capital One, 8.1% in Wells Fargo and 7.2% in JPMorgan Chase.
RPFGX’s 3-year and 5-year annualized returns are 12.2% and 13.3%, respectively. Its net expense ratio is 0.94%. RPFGX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
T. Rowe Price Financial Services (PRISX - Free Report) seeks long-term growth capital growth by investing the majority of its net assets in common stocks issued by companies engaged in providing financial services to consumers and industry. PRISX advisors aim to invest in high-quality companies with good appreciation prospects.
Matt J. Snowling has been the lead manager of PRISX since June 2021, and 79.9% of the fund is invested in the financial sector. Three top holdings for PRISX are 4.9% in Bank of America, 4.8% in Mastercard and 4.3% in Visa.
PRISX’s 3-year and 5-year annualized returns are 12% and 16%, respectively. Its net expense ratio is 0.83% compared to the category average of 1.10%. PRISX has a Zacks Mutual Fund Rank #2.
Fidelity Select Brokerage & Investment Management (FSLBX - Free Report) invests in securities of companies principally engaged in the exchange of financial instruments, stock brokerage, commodity brokerage, investment banking, or related investment advisory and financial decision support services. FSLBX invests primarily in common stocks.
Nadim Rabaia has been the lead manager of FSLBX since June 2023, and 76.7% of the fund is invested in the financial sector. Three top holdings for FSLBX are 7.9% in Moody’s, 6% in KKR & Co. and 5.1% in Blackstone Group.
FSLBX’s 3-year and 5-year annualized returns are 17.2% and 21%, respectively. Its net expense ratio is 0.69% compared to the category average of 1.25%. FSLBX has a Zacks Mutual Fund Rank #1.
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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Financial Mutual Funds to Buy on the Trump Tariff Impositions
The markets have already priced in that while the central bank would still be cutting rates in 2025, it would happen at a much slower pace than projected earlier. In September 2024, four cuts were anticipated for 2025. However, market participants are currently looking at a maximum of two such instances, which may go down further as the United States enters a phase of tariff impositions on trading partners and possible retaliations.
Interest rates, thus, will remain relatively high in the foreseeable future. When interest rates are high, banks and other financial institutions generally see higher profitability due to increased lending rates. The gap between such lending rates is considered a long-term asset for banks. Also, short-term liabilities such as deposits increase and boost net interest margins.
Stocks of banks, insurance companies and other financial institutions go up during high interest-rate periods. This is because financial services companies can earn more on the money they have and on the credit they issue to their customers. As if on cue, the S&P 500 Financials Select Sector SPDR (XLF), a benchmark for how the financial sector has been performing, has gained 8% so far in the two completed months in the calendar year.
In December 2024, the central bank projected that core inflation will hit 2.5% in 2025 before cooling to 2.2% in 2026 and 2% in 2027. With the Trump tariff policy in motion, earlier inflation projections might already be dated. This should prompt the Fed to hold interest rates high, which in turn will boost the financial sector.
For these reasons, financial mutual funds might provide much-required stability in a high-rate environment market. Hence, astute investors should consider such funds at present. 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).
We have thus selected three financial mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000 as well as carry a low expense ratio.
Davis Financial (RPFGX - Free Report) uses the Davis Investment Discipline to invest most of the fund's net assets in securities issued by companies principally engaged in the financial services sector. RPFGX invests primarily in common stocks.
Christopher Cullom Davis has been the lead manager of RPFGX since January 2014, and 92.4% of the fund is invested in the financial sector. Three top holdings for RPFGX are 10.3% in Capital One, 8.1% in Wells Fargo and 7.2% in JPMorgan Chase.
RPFGX’s 3-year and 5-year annualized returns are 12.2% and 13.3%, respectively. Its net expense ratio is 0.94%. RPFGX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
T. Rowe Price Financial Services (PRISX - Free Report) seeks long-term growth capital growth by investing the majority of its net assets in common stocks issued by companies engaged in providing financial services to consumers and industry. PRISX advisors aim to invest in high-quality companies with good appreciation prospects.
Matt J. Snowling has been the lead manager of PRISX since June 2021, and 79.9% of the fund is invested in the financial sector. Three top holdings for PRISX are 4.9% in Bank of America, 4.8% in Mastercard and 4.3% in Visa.
PRISX’s 3-year and 5-year annualized returns are 12% and 16%, respectively. Its net expense ratio is 0.83% compared to the category average of 1.10%. PRISX has a Zacks Mutual Fund Rank #2.
Fidelity Select Brokerage & Investment Management (FSLBX - Free Report) invests in securities of companies principally engaged in the exchange of financial instruments, stock brokerage, commodity brokerage, investment banking, or related investment advisory and financial decision support services. FSLBX invests primarily in common stocks.
Nadim Rabaia has been the lead manager of FSLBX since June 2023, and 76.7% of the fund is invested in the financial sector. Three top holdings for FSLBX are 7.9% in Moody’s, 6% in KKR & Co. and 5.1% in Blackstone Group.
FSLBX’s 3-year and 5-year annualized returns are 17.2% and 21%, respectively. Its net expense ratio is 0.69% compared to the category average of 1.25%. FSLBX has a Zacks Mutual Fund Rank #1.
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 >>