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Per the latest report from the Commerce Department, U.S. factory orders increased 0.7% in June. This marked its second consecutive rise in as many months. Such developments also indicate that the U.S. manufacturing sector is growing by leaps and bounds. The metric was boosted by robust demand for transportation equipment, electrical equipment, appliances as well as computer and electronic products.
Also, worldwide demand for manufacturing products witnessed a surge in the recent past. Under such broadly encouraging conditions, investing in mutual funds from the industrial sector seems prudent.
US Factory Orders Rise for the Second Straight Month
On Aug 2, the Commerce Department stated that U.S. factory orders for June rose to $501.7 billion. Further, new orders for manufactured durable goods also increased 0.8% to $251.5 billion in the month. This marked its fourth increase in the past five months.
Orders for transportation equipment rose 2.1%, providing a major boost to overall growth. Further, a 4.2% surge in orders for civilian aircraft provided the necessary impetus for growth in factory orders.
Moreover, orders of motor vehicles increased 0.9% in June and that for core capital goods increased 0.7% in the month. Finally, shipments for core capital goods, used to calculate the total business equipment spending in the GDP report rose 0.7%.
4 Best Funds to Buy Now
Given such positives, we have highlighted four industrial mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-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 Industrials Fund (FCYIX - Free Report) seeks capital appreciation. FCYIX normally invests a large portion of its 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 9.5% over the three-year and 11.2% 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.
FCYIX has a Zacks Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.04%.
Fidelity Select Automotive Port (FSAVX - Free Report) seeks capital appreciation. This fund invests the majority of its assets in common stocks of companies involved in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires and related services.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 3.5% over the three-year and 7.5% 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.
FSAVX has a Zacks Rank #2 and an annual expense ratio of 0.96%, which is below the category average of 1.17%.
Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) invests a big portion of its assets in securities of companies involved primarily in the research, manufacture and sale of products and services as per the defense or aerospace industries. The fund seeks capital growth by investing in both U.S. and non-U.S. companies.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 18.7% over the three-year and 17.4% 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.
FSDAX has a Zacks Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.04%.
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3 Funds to Buy on Sturdy Factory Orders in June
Per the latest report from the Commerce Department, U.S. factory orders increased 0.7% in June. This marked its second consecutive rise in as many months. Such developments also indicate that the U.S. manufacturing sector is growing by leaps and bounds. The metric was boosted by robust demand for transportation equipment, electrical equipment, appliances as well as computer and electronic products.
Also, worldwide demand for manufacturing products witnessed a surge in the recent past. Under such broadly encouraging conditions, investing in mutual funds from the industrial sector seems prudent.
US Factory Orders Rise for the Second Straight Month
On Aug 2, the Commerce Department stated that U.S. factory orders for June rose to $501.7 billion. Further, new orders for manufactured durable goods also increased 0.8% to $251.5 billion in the month. This marked its fourth increase in the past five months.
Orders for transportation equipment rose 2.1%, providing a major boost to overall growth. Further, a 4.2% surge in orders for civilian aircraft provided the necessary impetus for growth in factory orders.
Moreover, orders of motor vehicles increased 0.9% in June and that for core capital goods increased 0.7% in the month. Finally, shipments for core capital goods, used to calculate the total business equipment spending in the GDP report rose 0.7%.
4 Best Funds to Buy Now
Given such positives, we have highlighted four industrial mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-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 Industrials Fund (FCYIX - Free Report) seeks capital appreciation. FCYIX normally invests a large portion of its 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 9.5% over the three-year and 11.2% 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.
FCYIX has a Zacks Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.04%.
Fidelity Select Automotive Port (FSAVX - Free Report) seeks capital appreciation. This fund invests the majority of its assets in common stocks of companies involved in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires and related services.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 3.5% over the three-year and 7.5% 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.
FSAVX has a Zacks Rank #2 and an annual expense ratio of 0.96%, which is below the category average of 1.17%.
Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) invests a big portion of its assets in securities of companies involved primarily in the research, manufacture and sale of products and services as per the defense or aerospace industries. The fund seeks capital growth by investing in both U.S. and non-U.S. companies.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 18.7% over the three-year and 17.4% 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.
FSDAX has a Zacks Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.04%.
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 >>