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U.S. Retail Sales Grow for 5 Straight Months: 3 Fund Picks
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U.S. retail sales registered a steady rise for the fifth straight month in June. Increase in job addition, lower unemployment rate and low tax environment had a positive impact on consumer spending, which boosted retail sales and is expected to continue to benefit retailers in the coming months
Consumer outlays picked up in spring after a dull winter season. Auto parts dealers registered strong sales growth. Strong gains in gas stations also boosted overall retail sales. Sales from non-store retailers, home-improvement stores, restaurants and health care stores too moved north. Given this healthy pattern of consumer spending, it will be wise to invest in funds linked to the retail industry.
Consumer Spending Rise in June
Retail sales increased 0.5% in June in line with the consensus estimate, per the Department of Commerce. Retail sales have posted a year-over-year increase of 6.6%, a touch above the long-run average since 1980. Additionally, May’s increase was revised upwards, from 0.8% to 1.3%. Retail sales posted its fastest pace of growth in May since September 2017.
Out of 13 categories, eight witnessed growth. Auto sales advanced 0.9% after increasing 0.8% in May. Sales at gasoline stations increased 1%, largely supported by a spike in gasoline prices. Non-store retailers, which include online sellers, experienced a 1.3% increase in sales, the highest since last November.
Also, sales at health and personal care stores increased 2.2%, the fastest pace of gains in around 14 years. Sales at restaurants and building material stores increased 1.5% and 0.8%, respectively. Home-improvement stores, including furniture stores, experienced a 0.6% increase in sales.
Upbeat Labor Market, Low Tax Aid Retail Sales
Domestic non-farm payrolls advanced by 213,000 in June, significantly higher than the consensus estimate of 196,000, per the United States Bureau of Labor Statistics (BLS). Moreover, BLS reported that April's job numbers were revised up by 16,000 to 175,000, while May's figure was upwardly revised by 21,000 to 244,000.
Meanwhile, the unemployment rate rose by 0.2% to 4% in June. However, the unemployment rate increased slightly only because the labor force participation rate in June was 62.9%, reflecting a 0.2% increase from the prior month.
Moreover, last year, the much-awaited Tax Bill was finally signed by President Trump. Known as the Tax Cuts and Jobs Act of 2017, the reform permanently slashes corporate tax rates from 35% to 21%. Low tax scenario along with upbeat jobs report boding well for retail stocks.
3 Retail Fund Picks
Along with a steady increase in retail sales numbers in the last five months, companies related to the retail sector are continued to gain even further this month. This is borne out by the fact that the SPDR S&P Retail (XRT) gained 9.4% in the last three months. Against this encouraging backdrop, we have selected three retail mutual funds that boast a Zacks Mutual Zacks Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive 1-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests the majority of its assets in securities of companies engaged in the design, production or distribution of goods or services in the leisure industries. FDLSX comes under the category of consumer cyclical funds.
FDLSX carries an expense ratio of 0.77% compared with the category average of 1.39%. Moreover, FDLSX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 9.7%.
FDLSX has a Zacks Mutual Fund Rank #1. Further, Becky Painter is the fund manager of FDLSX since 2017.
Rydex Retailing Investor (RYRIX - Free Report) seeks appreciation of capital. RYRIX invests a large chunk of its assets in equity securities of those Retailing Companies that are traded mainly in the United States. The fund focuses on investing primarily in small- and mid-cap Retailing Companies.
RYRIX carries an expense ratio of 1.37% compared with the category average of 1.39%. Moreover, RYRIX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 23.8%.
RYRIX has a Zacks Mutual Fund Rank #2. Further, Michael P. Byrum is one of the fund managers of RYRIX since 1998.
Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) normally invests a bulk of its assets in securities of companies principally engaged in the manufacture and distribution of consumer discretionary services and products. FSCPX seeks appreciation of capital. The fund invests in both U.S. and non-U.S. companies.
FSCPX carries an expense ratio of 0.77% compared with the category average of 1.39%. Moreover, FSCPX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 23.1%.
FSCPX has a Zacks Mutual Fund Rank #2. Further, Katherine Shaw is the fund manager of FSCPX since 2017.
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U.S. Retail Sales Grow for 5 Straight Months: 3 Fund Picks
U.S. retail sales registered a steady rise for the fifth straight month in June. Increase in job addition, lower unemployment rate and low tax environment had a positive impact on consumer spending, which boosted retail sales and is expected to continue to benefit retailers in the coming months
Consumer outlays picked up in spring after a dull winter season. Auto parts dealers registered strong sales growth. Strong gains in gas stations also boosted overall retail sales. Sales from non-store retailers, home-improvement stores, restaurants and health care stores too moved north. Given this healthy pattern of consumer spending, it will be wise to invest in funds linked to the retail industry.
Consumer Spending Rise in June
Retail sales increased 0.5% in June in line with the consensus estimate, per the Department of Commerce. Retail sales have posted a year-over-year increase of 6.6%, a touch above the long-run average since 1980. Additionally, May’s increase was revised upwards, from 0.8% to 1.3%. Retail sales posted its fastest pace of growth in May since September 2017.
Out of 13 categories, eight witnessed growth. Auto sales advanced 0.9% after increasing 0.8% in May. Sales at gasoline stations increased 1%, largely supported by a spike in gasoline prices. Non-store retailers, which include online sellers, experienced a 1.3% increase in sales, the highest since last November.
Also, sales at health and personal care stores increased 2.2%, the fastest pace of gains in around 14 years. Sales at restaurants and building material stores increased 1.5% and 0.8%, respectively. Home-improvement stores, including furniture stores, experienced a 0.6% increase in sales.
Upbeat Labor Market, Low Tax Aid Retail Sales
Domestic non-farm payrolls advanced by 213,000 in June, significantly higher than the consensus estimate of 196,000, per the United States Bureau of Labor Statistics (BLS). Moreover, BLS reported that April's job numbers were revised up by 16,000 to 175,000, while May's figure was upwardly revised by 21,000 to 244,000.
Meanwhile, the unemployment rate rose by 0.2% to 4% in June. However, the unemployment rate increased slightly only because the labor force participation rate in June was 62.9%, reflecting a 0.2% increase from the prior month.
Moreover, last year, the much-awaited Tax Bill was finally signed by President Trump. Known as the Tax Cuts and Jobs Act of 2017, the reform permanently slashes corporate tax rates from 35% to 21%. Low tax scenario along with upbeat jobs report boding well for retail stocks.
3 Retail Fund Picks
Along with a steady increase in retail sales numbers in the last five months, companies related to the retail sector are continued to gain even further this month. This is borne out by the fact that the SPDR S&P Retail (XRT) gained 9.4% in the last three months. Against this encouraging backdrop, we have selected three retail mutual funds that boast a Zacks Mutual Zacks Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive 1-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests the majority of its assets in securities of companies engaged in the design, production or distribution of goods or services in the leisure industries. FDLSX comes under the category of consumer cyclical funds.
FDLSX carries an expense ratio of 0.77% compared with the category average of 1.39%. Moreover, FDLSX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 9.7%.
FDLSX has a Zacks Mutual Fund Rank #1. Further, Becky Painter is the fund manager of FDLSX since 2017.
Rydex Retailing Investor (RYRIX - Free Report) seeks appreciation of capital. RYRIX invests a large chunk of its assets in equity securities of those Retailing Companies that are traded mainly in the United States. The fund focuses on investing primarily in small- and mid-cap Retailing Companies.
RYRIX carries an expense ratio of 1.37% compared with the category average of 1.39%. Moreover, RYRIX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 23.8%.
RYRIX has a Zacks Mutual Fund Rank #2. Further, Michael P. Byrum is one of the fund managers of RYRIX since 1998.
Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) normally invests a bulk of its assets in securities of companies principally engaged in the manufacture and distribution of consumer discretionary services and products. FSCPX seeks appreciation of capital. The fund invests in both U.S. and non-U.S. companies.
FSCPX carries an expense ratio of 0.77% compared with the category average of 1.39%. Moreover, FSCPX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 23.1%.
FSCPX has a Zacks Mutual Fund Rank #2. Further, Katherine Shaw is the fund manager of FSCPX since 2017.
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 >>