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As investors gear up for the release of Q4 2017 earnings, they largely expect the earnings momentum, which prevailed for the major part of 2017, to continue. Further, tax reforms are finally in place and despite banks feeling the heat due to adjustments in values of deferred tax assets and liabilities, earnings are expected to largely surpass investors’ expectations.
Sectors such as energy, technology and industrials are expected to show maximum gains. Under such circumstances, mutual funds that invest heavily in common stocks of companies from the winning sectors are highly called for.
Sectors Poised to Outperform Expectations
The energy sector, in particular, is expected to record the strongest growth in the fourth quarter. Total earnings for the sector are expected to grow a whopping 178.5% on 24.1% higher revenues. This sector has gained from a rise in oil prices due to President Trump’s efforts to roll back regulations to boost oil production. Further Trump’s efforts to save the coal industry have also benefited the energy sector.
The industrials sector is expected to give a stupendous performance in 4Q17. Fired up by a surge in sales resulting from demand for housing after the carnage by hurricanes, earnings for the sector are expected to increase 8.8% from the same period last year on 6.9% higher revenues. Meanwhile, the industrial sector has also benefited from a boost in manufacturing activity in the United States.
Finally, earnings for the tech sector are poised for 14% growth on the back of 8.5% higher revenues from the same period last year. Developments in domains such as artificial intelligence, Internet of Things and cloud computing have led to widespread gains for the tech sector. Moreover, the sector has also benefited from a rally in semiconductor stocks. This momentum is expected to continue in the fourth quarter. For the record, PHLX Semiconductor index surged as much as 40% last year.
5 Best Funds to Invest In
Thus, we have highlighted five mutual funds that invest more than 70% of their assets in companies from technology, energy and industrial sectors. These mutual funds sport a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three-year and one-year returns. Additionally, the minimum initial investment is within $5000 and net assets are above $50 million.
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 Industrials Fund (FCYIX - Free Report) seeks capital appreciation. FCYIX normally invests at least 80% of assets in common stocks of companies principally engaged in the research, development, manufacture, distribution, supply, or sale of materials, equipment, products, or services related to cyclical industries.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 10.8% over the three-year and 15% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Fidelity Select Industrials Fund, as of the last filing, allocates their fund in top two major groups, namely Large Value and High Yield Bond. Further, as of the last filing, United Technologies Corp., Honeywell International Inc. and Caterpillar Inc. were the top holdings for FCYIX.
FCYIX has a Zacks Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.27%. The fund has three and one-year returns of 13% and 23.2%, respectively.
Dreyfus Natural Resources I (DLDRX - Free Report) invests the lion’s share of its assets in stocks of those companies that are engaged in natural resources and related sectors. DLDRX may also invest in non-U.S. companies, including those in emerging markets. The fund seeks growth of capital for the long run.
This Sector - Energy product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 4.1% and 5.4%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Dreyfus Natural Resources I, as of the last filing, allocates their fund in the top two major groups; High Yield Bond and Large Value. Further, as of the last filing, Glencore PLC, Agrium Inc. and Rio Tinto Ltd were the top holdings for DLDRX.
DLDRX has a Zacks Rank #1 and an annual expense ratio of 1.05%, which is below the category average of 1.40%. The fund has three and one-year returns of 6.4% and 15.3%, respectively.
Fidelity Advisor Energy T (FAGNX - Free Report) seeks growth of capital over the long run. FAGNX invests a chunk of its assets in common stocks of companies engaged in operations related to the energy domain. The fund invests in securities of both U.S. and non-U.S. companies. It is a non-diversified fund and gives precedence to several factors including financial strength and economic condition before selecting a company.
This Sector - Energy product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 0.5% and 1.8%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
As of the last filing, EOG Resources Inc, Chevron Corp. and Diamondback Energy Inc. were the top holdings for FAGNX.
FAGNX has a Zacks Rank #2 and an annual expense ratio of 1.35%, which is below the category average of 1.37%. The fund has three and one-year returns of 3.7% and 1.9%, respectively.
Fidelity Select Industrial Equip Port seeks capital appreciation. The fund normally invests the lion's share of its assets in common stocks of companies involved in the manufacture, distribution and service of products and equipment for the industrial sector.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 11.4% over the three-year benchmark and 13% over the five-year benchmark. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Fidelity Select Industrial Equip Port, as of the last filing, allocates its fund in top two major groups; Large Value and Small Growth. Further, as of the last filing, Boeing Co, AMETEK Inc and Honeywell International Inc were the top holdings for FSCGX.
FSCGX has a Zacks Rank #2 and an annual expense ratio of 0.83%, which is below the category average of 1.27%. The fund has three and one-year returns of 13.9% and 22.9%, respectively.
Columbia Global Technology Growth (CMTFX - Free Report) seeks capital appreciation by investing at least 65% of its assets in equity securities of technology companies that may benefit from technological improvements, advancements or developments, and have attractive growth prospects.
This Sector - Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 21.4% and 25.2%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Columbia Global Technology Growth, as of the last filing, allocates its fund in top two major groups; Large Growth and Emerging Market. Further, as of the last filing, Microsoft Corp, Apple Inc and Alphabet Inc A were the top holdings for CMTFX.
CMTFX has a Zacks Rank #1 and an annual expense ratio of 1.07%, which is below the category average of 1.27%. The fund has three and one-year returns of 23.5% and 44.8%, respectively.
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Q4 Earnings Underway, 5 Best Funds to Buy
As investors gear up for the release of Q4 2017 earnings, they largely expect the earnings momentum, which prevailed for the major part of 2017, to continue. Further, tax reforms are finally in place and despite banks feeling the heat due to adjustments in values of deferred tax assets and liabilities, earnings are expected to largely surpass investors’ expectations.
Sectors such as energy, technology and industrials are expected to show maximum gains. Under such circumstances, mutual funds that invest heavily in common stocks of companies from the winning sectors are highly called for.
Sectors Poised to Outperform Expectations
The energy sector, in particular, is expected to record the strongest growth in the fourth quarter. Total earnings for the sector are expected to grow a whopping 178.5% on 24.1% higher revenues. This sector has gained from a rise in oil prices due to President Trump’s efforts to roll back regulations to boost oil production. Further Trump’s efforts to save the coal industry have also benefited the energy sector.
The industrials sector is expected to give a stupendous performance in 4Q17. Fired up by a surge in sales resulting from demand for housing after the carnage by hurricanes, earnings for the sector are expected to increase 8.8% from the same period last year on 6.9% higher revenues. Meanwhile, the industrial sector has also benefited from a boost in manufacturing activity in the United States.
Finally, earnings for the tech sector are poised for 14% growth on the back of 8.5% higher revenues from the same period last year. Developments in domains such as artificial intelligence, Internet of Things and cloud computing have led to widespread gains for the tech sector. Moreover, the sector has also benefited from a rally in semiconductor stocks. This momentum is expected to continue in the fourth quarter. For the record, PHLX Semiconductor index surged as much as 40% last year.
5 Best Funds to Invest In
Thus, we have highlighted five mutual funds that invest more than 70% of their assets in companies from technology, energy and industrial sectors. These mutual funds sport a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three-year and one-year returns. Additionally, the minimum initial investment is within $5000 and net assets are above $50 million.
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 Industrials Fund (FCYIX - Free Report) seeks capital appreciation. FCYIX normally invests at least 80% of assets in common stocks of companies principally engaged in the research, development, manufacture, distribution, supply, or sale of materials, equipment, products, or services related to cyclical industries.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 10.8% over the three-year and 15% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Fidelity Select Industrials Fund, as of the last filing, allocates their fund in top two major groups, namely Large Value and High Yield Bond. Further, as of the last filing, United Technologies Corp., Honeywell International Inc. and Caterpillar Inc. were the top holdings for FCYIX.
FCYIX has a Zacks Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.27%. The fund has three and one-year returns of 13% and 23.2%, respectively.
Dreyfus Natural Resources I (DLDRX - Free Report) invests the lion’s share of its assets in stocks of those companies that are engaged in natural resources and related sectors. DLDRX may also invest in non-U.S. companies, including those in emerging markets. The fund seeks growth of capital for the long run.
This Sector - Energy product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 4.1% and 5.4%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Dreyfus Natural Resources I, as of the last filing, allocates their fund in the top two major groups; High Yield Bond and Large Value. Further, as of the last filing, Glencore PLC, Agrium Inc. and Rio Tinto Ltd were the top holdings for DLDRX.
DLDRX has a Zacks Rank #1 and an annual expense ratio of 1.05%, which is below the category average of 1.40%. The fund has three and one-year returns of 6.4% and 15.3%, respectively.
Fidelity Advisor Energy T (FAGNX - Free Report) seeks growth of capital over the long run. FAGNX invests a chunk of its assets in common stocks of companies engaged in operations related to the energy domain. The fund invests in securities of both U.S. and non-U.S. companies. It is a non-diversified fund and gives precedence to several factors including financial strength and economic condition before selecting a company.
This Sector - Energy product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 0.5% and 1.8%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
As of the last filing, EOG Resources Inc, Chevron Corp. and Diamondback Energy Inc. were the top holdings for FAGNX.
FAGNX has a Zacks Rank #2 and an annual expense ratio of 1.35%, which is below the category average of 1.37%. The fund has three and one-year returns of 3.7% and 1.9%, respectively.
Fidelity Select Industrial Equip Port seeks capital appreciation. The fund normally invests the lion's share of its assets in common stocks of companies involved in the manufacture, distribution and service of products and equipment for the industrial sector.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 11.4% over the three-year benchmark and 13% over the five-year benchmark. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Fidelity Select Industrial Equip Port, as of the last filing, allocates its fund in top two major groups; Large Value and Small Growth. Further, as of the last filing, Boeing Co, AMETEK Inc and Honeywell International Inc were the top holdings for FSCGX.
FSCGX has a Zacks Rank #2 and an annual expense ratio of 0.83%, which is below the category average of 1.27%. The fund has three and one-year returns of 13.9% and 22.9%, respectively.
Columbia Global Technology Growth (CMTFX - Free Report) seeks capital appreciation by investing at least 65% of its assets in equity securities of technology companies that may benefit from technological improvements, advancements or developments, and have attractive growth prospects.
This Sector - Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 21.4% and 25.2%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Columbia Global Technology Growth, as of the last filing, allocates its fund in top two major groups; Large Growth and Emerging Market. Further, as of the last filing, Microsoft Corp, Apple Inc and Alphabet Inc A were the top holdings for CMTFX.
CMTFX has a Zacks Rank #1 and an annual expense ratio of 1.07%, which is below the category average of 1.27%. The fund has three and one-year returns of 23.5% and 44.8%, respectively.
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 >>