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3 Funds to Make the Most of a Rebound in Job Market
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Rebound in the U.S. job market continued in October, with job additions last month marking the sixth straight month of consistent growth. Per the U.S. Bureau of Labor Statistics’ report on Nov 6, unemployment rate fell to 6.9% in October from 7.9% last month. The figures also beat the consensus estimate of 7.6%. While there has been a decline in employment in the government sector, areas like leisure and hospitality, professional and business services, retail trade, and constructionhas witnessed notable job gains.
The report also states that nonfarm payrolls increased by 638,000 jobs in October, after rising a revised 672,000 in the previous month, and above the consensus estimate of 616,000. Two issues have been hindering job growth over the past months -- rising coronavirus cases and lack of new fiscal support.
Consumer Credit Rises in September
Another major factor that reflects economies’ health is consumers’ borrowing capacity. Consumers in the United States have increased borrowing in September. In fact, this is the first gain in this particular economic parameter in the past seven months. A major jump has been recorded in credit card borrowings since the pandemic hit the country.
On Nov 6, the Federal Reserve reported that total borrowing rose by $16.1 billion for September, after rebounding from a $6.9% drop in August. This increase in borrowing was boosted by a $3.98-billion increase in credit card borrowing, which witnessed its first rise since February this year. Since the coronavirus outbreak, households cut down credit card useas millions lost their jobs. Now that the scenario in the job market is recovering, credit card usage has shot up signaling at households’ willingness to take on more debt to finance spending. Additionally, auto loans and student loans increased by $12.2 billion in September, the category which had seen a $6.9-billion drop in April.
3 Fund Picks
Given the positive signs of recovery in the job market, we have shortlisted three mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to gain. Moreover, these funds have encouraging five-year returns. Additionally, the minimum initial investment is within $5000.
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.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Retailing Portfolio (FSRPX - Free Report) fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 18.7% over the past five-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is below the category average of 1.22%.
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of its assets in the common stock of companies engaged in providing financial services to consumers and the industry.
This Sector - Finance product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.6% over the past five-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FIDSX has a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.38%.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 10.4% over the past five years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FDLSX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.22%.
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3 Funds to Make the Most of a Rebound in Job Market
Rebound in the U.S. job market continued in October, with job additions last month marking the sixth straight month of consistent growth. Per the U.S. Bureau of Labor Statistics’ report on Nov 6, unemployment rate fell to 6.9% in October from 7.9% last month. The figures also beat the consensus estimate of 7.6%. While there has been a decline in employment in the government sector, areas like leisure and hospitality, professional and business services, retail trade, and constructionhas witnessed notable job gains.
The report also states that nonfarm payrolls increased by 638,000 jobs in October, after rising a revised 672,000 in the previous month, and above the consensus estimate of 616,000. Two issues have been hindering job growth over the past months -- rising coronavirus cases and lack of new fiscal support.
Consumer Credit Rises in September
Another major factor that reflects economies’ health is consumers’ borrowing capacity. Consumers in the United States have increased borrowing in September. In fact, this is the first gain in this particular economic parameter in the past seven months. A major jump has been recorded in credit card borrowings since the pandemic hit the country.
On Nov 6, the Federal Reserve reported that total borrowing rose by $16.1 billion for September, after rebounding from a $6.9% drop in August. This increase in borrowing was boosted by a $3.98-billion increase in credit card borrowing, which witnessed its first rise since February this year. Since the coronavirus outbreak, households cut down credit card useas millions lost their jobs. Now that the scenario in the job market is recovering, credit card usage has shot up signaling at households’ willingness to take on more debt to finance spending. Additionally, auto loans and student loans increased by $12.2 billion in September, the category which had seen a $6.9-billion drop in April.
3 Fund Picks
Given the positive signs of recovery in the job market, we have shortlisted three mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to gain. Moreover, these funds have encouraging five-year returns. Additionally, the minimum initial investment is within $5000.
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.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Retailing Portfolio (FSRPX - Free Report) fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 18.7% over the past five-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is below the category average of 1.22%.
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of its assets in the common stock of companies engaged in providing financial services to consumers and the industry.
This Sector - Finance product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.6% over the past five-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FIDSX has a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.38%.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 10.4% over the past five years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FDLSX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.22%.
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 >>