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3 Winning Financial Mutual Funds That Still Have Room to Run
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With a few weeks remaining before the end of the calendar year 2022, the Dow, the S&P 500 and the Nasdaq continue to be in the negative territory. The Dow, S&P 500 and Nasdaq have posted a negative return of 7.04%, 16.8% and 29.17%, respectively so far this year. Market pundits now anticipate the Fed to remain aggressive in its monetary policy stance as an upbeat service sector report and improvement in wages would lead to an increase in inflation.
November services sector PMI data, provided by the Institute for Supply Management (ISM), jumped to 56.5% from 54.4% in October, indicating exceptional growth. At the same time, the employment level increased to 263,000 jobs for November and average hourly income rose 0.6% for the month, up 5.1% on a year-over-year basis.
Thus, in a desperate effort to check inflation, the Fed’s attempts to dry the liquidity in the market by slowing down the labor market seem ineffective. The above data suggests that the Fed will continue to hike interest rates in the near term. The interest rate increase has already brought the borrowing rate to a range of 3.75% to 4% this year.
A higher interest rate is a good source of income for the financial sector industry, especially banks whose main business stands on earning interest from lending. Average Americans who have enjoyed cheap borrowing rates for a decade-long period are facing difficulty. Insurance companies however stand to gain from the increase in interest rates as these hold interest-sensitive assets for their customers.
Thus, from an investment standpoint, we have highlighted three financial mutual funds that are expected to give commendable returns in the future. 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 impressive 3-year and 5-year returns as well, boast a Zacks Mutual Fund Rank #1 (Strong Buy) and Rank #2 (Buy), offer a minimum initial investment within $5,000, and carry a low expense ratio.
Fidelity Select Insurance Portfolio (FSPCX - Free Report) invests most of its net assets in common stocks of domestic and foreign companies that are principally engaged in underwriting, reinsuring, selling, distributing, or placing of property and casualty, life, or health insurance. FSPCX advisors choose to invest in stocks based on fundamental analysis factors such as financial condition, industry position, as well as market and economic conditions.
Peter Deutsch has been the lead manager of FSPCX since Jun 1, 2013, and most of the fund’s holdings were in finance (95.15%), others (4.72%) and services (0.13%) as of Aug 31, 2022.
FSPCX’s 3-year and 5-year returns are 12.2% and 9.4%, respectively. The annual expense ratio of 0.78% is lower than the category average of 1.08%. FSPCX 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.
John Hancock Regional Bank Fund (FRBAX - Free Report) invests most of its net assets in equity securities of foreign and domestic regional banks and financial services companies, including commercial banks, industrial banks, savings and loan associations, and financial and bank holding companies, irrespective of their size. FRBAX advisors also invest a small portion of its assets in stocks of companies outside the financial services sector and in below-investment-grade bonds.
Susan A. Curry has been the lead manager of FRBAX since May 1, 2006, and most of the fund’s holdings were in companies like M&T Corporation (3.30%), Regions Financial Corporation (3.0%) and Huntington Bancshares Incorporated (2.69%) as of Jul 31, 2022.
FRBAX’s 3-year and 5-year returns are 8.0% and 4.7%, respectively. The annual expense ratio of 1.20% compared to the category average of 1.08%. FRBAX has a Zacks Mutual Fund Rank #1.
Mutual Financial Services Fund (TEFAX - Free Report) seeks capital appreciation along with short-term income by investing most of its net assets in securities of domestic and foreign financial services companies. TEFAX choose to invest in stocks that are available at market prices lower than their intrinsic value.
Andrew B. Dinnhaupt has been the lead manager of TEFAX since Jan 2, 2014, and most of the fund’s holdings were in companies like Everest Re Group ltd. (4.22%), Metlife Incorporated (4.07%) and Voya Financial Incorporated (3.91%) as of Jun 30, 2022.
TEFAX’s 3-year and 5-year returns are 4.7% and 1.7%, respectively. The annual expense ratio of 1.14% compared to the category average of 1.08%. TEFAX has a Zacks Mutual Fund Rank #2.
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3 Winning Financial Mutual Funds That Still Have Room to Run
With a few weeks remaining before the end of the calendar year 2022, the Dow, the S&P 500 and the Nasdaq continue to be in the negative territory. The Dow, S&P 500 and Nasdaq have posted a negative return of 7.04%, 16.8% and 29.17%, respectively so far this year. Market pundits now anticipate the Fed to remain aggressive in its monetary policy stance as an upbeat service sector report and improvement in wages would lead to an increase in inflation.
November services sector PMI data, provided by the Institute for Supply Management (ISM), jumped to 56.5% from 54.4% in October, indicating exceptional growth. At the same time, the employment level increased to 263,000 jobs for November and average hourly income rose 0.6% for the month, up 5.1% on a year-over-year basis.
Thus, in a desperate effort to check inflation, the Fed’s attempts to dry the liquidity in the market by slowing down the labor market seem ineffective. The above data suggests that the Fed will continue to hike interest rates in the near term. The interest rate increase has already brought the borrowing rate to a range of 3.75% to 4% this year.
A higher interest rate is a good source of income for the financial sector industry, especially banks whose main business stands on earning interest from lending. Average Americans who have enjoyed cheap borrowing rates for a decade-long period are facing difficulty. Insurance companies however stand to gain from the increase in interest rates as these hold interest-sensitive assets for their customers.
Thus, from an investment standpoint, we have highlighted three financial mutual funds that are expected to give commendable returns in the future. 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 impressive 3-year and 5-year returns as well, boast a Zacks Mutual Fund Rank #1 (Strong Buy) and Rank #2 (Buy), offer a minimum initial investment within $5,000, and carry a low expense ratio.
Fidelity Select Insurance Portfolio (FSPCX - Free Report) invests most of its net assets in common stocks of domestic and foreign companies that are principally engaged in underwriting, reinsuring, selling, distributing, or placing of property and casualty, life, or health insurance. FSPCX advisors choose to invest in stocks based on fundamental analysis factors such as financial condition, industry position, as well as market and economic conditions.
Peter Deutsch has been the lead manager of FSPCX since Jun 1, 2013, and most of the fund’s holdings were in finance (95.15%), others (4.72%) and services (0.13%) as of Aug 31, 2022.
FSPCX’s 3-year and 5-year returns are 12.2% and 9.4%, respectively. The annual expense ratio of 0.78% is lower than the category average of 1.08%. FSPCX 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.
John Hancock Regional Bank Fund (FRBAX - Free Report) invests most of its net assets in equity securities of foreign and domestic regional banks and financial services companies, including commercial banks, industrial banks, savings and loan associations, and financial and bank holding companies, irrespective of their size. FRBAX advisors also invest a small portion of its assets in stocks of companies outside the financial services sector and in below-investment-grade bonds.
Susan A. Curry has been the lead manager of FRBAX since May 1, 2006, and most of the fund’s holdings were in companies like M&T Corporation (3.30%), Regions Financial Corporation (3.0%) and Huntington Bancshares Incorporated (2.69%) as of Jul 31, 2022.
FRBAX’s 3-year and 5-year returns are 8.0% and 4.7%, respectively. The annual expense ratio of 1.20% compared to the category average of 1.08%. FRBAX has a Zacks Mutual Fund Rank #1.
Mutual Financial Services Fund (TEFAX - Free Report) seeks capital appreciation along with short-term income by investing most of its net assets in securities of domestic and foreign financial services companies. TEFAX choose to invest in stocks that are available at market prices lower than their intrinsic value.
Andrew B. Dinnhaupt has been the lead manager of TEFAX since Jan 2, 2014, and most of the fund’s holdings were in companies like Everest Re Group ltd. (4.22%), Metlife Incorporated (4.07%) and Voya Financial Incorporated (3.91%) as of Jun 30, 2022.
TEFAX’s 3-year and 5-year returns are 4.7% and 1.7%, respectively. The annual expense ratio of 1.14% compared to the category average of 1.08%. TEFAX has a Zacks Mutual Fund Rank #2.
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 >>