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3 Funds to Boost Your Portfolio on Steady Decline in Inflation
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Inflation declined further in November, while GDP continues to grow, a sign the economy will have a softer landing than expected earlier. The sharp decline in inflation came as the biggest Christmas gift that the Federal Reserve could have expected as it readies to slash interest rates in 2024.
The Commerce Department said on Dec 22 that the Federal Reserve’s favorite inflation gauge, the personal consumption expenditures (PCE) price index fell 0.1% in November. This is the first time the PCE index reading has dropped month over month since April 2022.
The PCE index rose 2.6% year over year in November after increasing 2.9% in October. Core PCE increased just 0.1% in November on a month-over-month basis. Year over year, core PCE increased 3.2%.
The Federal Reserve’s aggressive monetary tightening campaign that saw it hiking interest rates by 525 basis points over the past 21 months resulted in a sharp decline in inflation.
Several Fed officials are now confident that inflation will gradually meet the Fed’s 2% target. This saw the Fed leaving interest rates steady at its current range of 5.35-5.50% in its December policy meeting. The Fed hasn’t hiked interest rates in its past three FOMC meetings, indicating that it may be done with its rate hikes.
Federal Reserve Chairman Jerome Powell also said that the central bank will closely monitor inflation data and try not to keep interest rates higher for a longer period, raising expectations for rate cuts in 2024.
Federal Reserve officials are now expecting to go for three rate cuts of 25 basis points each in 2024, which bodes well for the economy. Lower borrowing costs bode well for growth stocks, particularly the tech sector.
Our Choices
As a result, we've chosen three funds from the tech sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, 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.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Semiconductors Portfolio (FSELX - Free Report) fund seeks capital appreciation. FSELX normally invests at least 80% of its assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards, and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Select Semiconductors Portfolio has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 20.9% and 29.8%, respectively. The annual expense ratio of 0.69% is lower than the category average of 1.05%. FSELX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio (FSPTX - Free Report) seeks capital appreciation by investing most of its assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or benefit significantly from technological advances and improvements. Most of the fund's holdings were in companies like Microsoft Corp (17.3%), Apple (17%) and Nvidia Corp (13.4%) as of Aug 31, 2023.
Specifically, Fidelity Select Technology Portfolio fund’s returns over the three and five-year benchmarks are 7.6% and 21.3%, respectively. The annual expense ratio of 0.70% is lower than the category average of 1.05%. FSPTX carries 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.
Red Oak Technology Select (ROGSX - Free Report) fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semi-conductors and electronics.
Specifically, Red Oak Technology Select fund’s returns over the three and five-year benchmarks are 8.4% and 13.8%, respectively. The annual expense ratio of 0.92% is lower than the category average of 1.05%. ROGSX carries 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.
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3 Funds to Boost Your Portfolio on Steady Decline in Inflation
Inflation declined further in November, while GDP continues to grow, a sign the economy will have a softer landing than expected earlier. The sharp decline in inflation came as the biggest Christmas gift that the Federal Reserve could have expected as it readies to slash interest rates in 2024.
The Commerce Department said on Dec 22 that the Federal Reserve’s favorite inflation gauge, the personal consumption expenditures (PCE) price index fell 0.1% in November. This is the first time the PCE index reading has dropped month over month since April 2022.
The PCE index rose 2.6% year over year in November after increasing 2.9% in October. Core PCE increased just 0.1% in November on a month-over-month basis. Year over year, core PCE increased 3.2%.
The Federal Reserve’s aggressive monetary tightening campaign that saw it hiking interest rates by 525 basis points over the past 21 months resulted in a sharp decline in inflation.
Several Fed officials are now confident that inflation will gradually meet the Fed’s 2% target. This saw the Fed leaving interest rates steady at its current range of 5.35-5.50% in its December policy meeting. The Fed hasn’t hiked interest rates in its past three FOMC meetings, indicating that it may be done with its rate hikes.
Federal Reserve Chairman Jerome Powell also said that the central bank will closely monitor inflation data and try not to keep interest rates higher for a longer period, raising expectations for rate cuts in 2024.
Federal Reserve officials are now expecting to go for three rate cuts of 25 basis points each in 2024, which bodes well for the economy. Lower borrowing costs bode well for growth stocks, particularly the tech sector.
Our Choices
As a result, we've chosen three funds from the tech sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, 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.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Semiconductors Portfolio (FSELX - Free Report) fund seeks capital appreciation. FSELX normally invests at least 80% of its assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards, and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Select Semiconductors Portfolio has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 20.9% and 29.8%, respectively. The annual expense ratio of 0.69% is lower than the category average of 1.05%. FSELX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio (FSPTX - Free Report) seeks capital appreciation by investing most of its assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or benefit significantly from technological advances and improvements. Most of the fund's holdings were in companies like Microsoft Corp (17.3%), Apple (17%) and Nvidia Corp (13.4%) as of Aug 31, 2023.
Specifically, Fidelity Select Technology Portfolio fund’s returns over the three and five-year benchmarks are 7.6% and 21.3%, respectively. The annual expense ratio of 0.70% is lower than the category average of 1.05%. FSPTX carries 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.
Red Oak Technology Select (ROGSX - Free Report) fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semi-conductors and electronics.
Specifically, Red Oak Technology Select fund’s returns over the three and five-year benchmarks are 8.4% and 13.8%, respectively. The annual expense ratio of 0.92% is lower than the category average of 1.05%. ROGSX carries 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.
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 >>