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Employment data for the first month of 2019 exceeded expectations, as nonfarm payrolls surged by 304,000 despite the longest partial government shutdown in U.S. history. The unemployment rate, by the way, edged up to 4% in January, marking a possible reflection of the shutdown, the report cited.
In addition, the U6 unemployment rate rose to 8.1% in January from 7.6% in the month before, a Labor department report cited. U6 is the total number of unemployed persons plus those into part-time jobs and those seeking jobs at irregular intervals.
Although the number of unemployed persons reached 6.5 million with the uptick in unemployment rate, the jobs data was impressive and powerful given that economists were expecting a slowdown in growth this year.
Moreover, new job additions were broad-based in January as many industries posted impressive employment growth. According to the Labor department’s report, employment increased across leisure and hospitality, construction, health care, transportation and warehousing, professional and business services etc. This is why it is ideal to add some mutual funds to your portfolio that invest in several sectors that contributed the most to job gains this month.
Leisure & Hospitality
New job additions in the leisure & hospitality industry surpassed any other sector, with 74,000 new vacancies being created in January. Job gains occurred in restaurants and pubs, and other recreational places. In the span of a year, the sector has added 410,000 new jobs.
Construction
In January, 52,000 new jobs were added in the sector with job gains seen among specialty trade contractors, heavy and civil engineering construction, and residential building. Over the past year, construction has added 338,000 new jobs.
Healthcare
New job additions soared by 42,000 in the sector in January, taking its annual growth to 368,000. Employment rose in the healthcare sector as hospitals added new staff and ambulatory healthcare services sought new personnel.
Professional and Business Services
Employment in this industry went up by 30,000 in January and has witnessed an uptick of 546,000 in the span of a year.
Transportation and Warehousing
In January, employment in transportation and warehousing increased by 27,000, taking its 12-month total to 219,000.
Retail
Employment in the retail industry grew by 21,000 in January. Job gains occurred across a broad range of stores offering a variety of consumer discretionary products. Employment in this industry hasn’t shown much change over a year.
4 Sectoral Mutual Funds to Buy
We have selected mutual funds from four sectors mentioned above. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform 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 Leisure (FDLSX - Free Report) seeks to gain capital by primarily investing in common stocks. The fund invests a large share of its assets in businesses that are involved in activities such as design, production, or distribution of services and products in the leisure industries. The fund invests in U.S. and non-U.S. companies alike.
This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.34%. The fund has three and five-year returns of 8.41% and 7.36%, respectively.
Fidelity Select Construction & Housing Portfolio (FSHOX - Free Report) seek to grow its capital by investing the majority of its net assets in securities of companies that design and construct residential, industrial, commercial buildings and public work facilities etc. The fund is non-diversified and primarily invests in common stocks.
This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSHOX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.79%, which is below the category average of 1.34%. The fund has three and five-year returns of 3.80% and 6.72%, respectively.
Schwab Health Care (SWHFX - Free Report) seeks long-term capital appreciation by primarily investing in securities of companies in the healthcare sector. The fund invests the majority of its net assets in the equity securities of such companies which may include health care facilities operations, pharmaceutical and biotechnology companies, and medical product manufacturers and suppliers etc.
This Sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
SWHFXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.80%, which is below the category average of 1.28%. The fund has three and five-year returns of 6.13% and 9.51%, respectively.
Fidelity Select Consumer Discret Port (FSCPX - Free Report) aims to gain capital by investing the majority of its assets in securities of companies that are primarily engaged in design, manufacture and distribution of consumer discretionary products. The fund invests in U.S. and non-U.S. stocks alike. Among its top holdings, the fund has companies such as Amazon, Home Depot and McDonald’s etc.
This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSCPXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.34%. The fund has three and five-year returns of 8.06% and 7.95%, respectively.
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4 Funds to Gain From a Hearty Jobs Report
Employment data for the first month of 2019 exceeded expectations, as nonfarm payrolls surged by 304,000 despite the longest partial government shutdown in U.S. history. The unemployment rate, by the way, edged up to 4% in January, marking a possible reflection of the shutdown, the report cited.
In addition, the U6 unemployment rate rose to 8.1% in January from 7.6% in the month before, a Labor department report cited. U6 is the total number of unemployed persons plus those into part-time jobs and those seeking jobs at irregular intervals.
Although the number of unemployed persons reached 6.5 million with the uptick in unemployment rate, the jobs data was impressive and powerful given that economists were expecting a slowdown in growth this year.
Moreover, new job additions were broad-based in January as many industries posted impressive employment growth. According to the Labor department’s report, employment increased across leisure and hospitality, construction, health care, transportation and warehousing, professional and business services etc. This is why it is ideal to add some mutual funds to your portfolio that invest in several sectors that contributed the most to job gains this month.
Leisure & Hospitality
New job additions in the leisure & hospitality industry surpassed any other sector, with 74,000 new vacancies being created in January. Job gains occurred in restaurants and pubs, and other recreational places. In the span of a year, the sector has added 410,000 new jobs.
Construction
In January, 52,000 new jobs were added in the sector with job gains seen among specialty trade contractors, heavy and civil engineering construction, and residential building. Over the past year, construction has added 338,000 new jobs.
Healthcare
New job additions soared by 42,000 in the sector in January, taking its annual growth to 368,000. Employment rose in the healthcare sector as hospitals added new staff and ambulatory healthcare services sought new personnel.
Professional and Business Services
Employment in this industry went up by 30,000 in January and has witnessed an uptick of 546,000 in the span of a year.
Transportation and Warehousing
In January, employment in transportation and warehousing increased by 27,000, taking its 12-month total to 219,000.
Retail
Employment in the retail industry grew by 21,000 in January. Job gains occurred across a broad range of stores offering a variety of consumer discretionary products. Employment in this industry hasn’t shown much change over a year.
4 Sectoral Mutual Funds to Buy
We have selected mutual funds from four sectors mentioned above. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform 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 Leisure (FDLSX - Free Report) seeks to gain capital by primarily investing in common stocks. The fund invests a large share of its assets in businesses that are involved in activities such as design, production, or distribution of services and products in the leisure industries. The fund invests in U.S. and non-U.S. companies alike.
This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.34%. The fund has three and five-year returns of 8.41% and 7.36%, respectively.
Fidelity Select Construction & Housing Portfolio (FSHOX - Free Report) seek to grow its capital by investing the majority of its net assets in securities of companies that design and construct residential, industrial, commercial buildings and public work facilities etc. The fund is non-diversified and primarily invests in common stocks.
This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSHOX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.79%, which is below the category average of 1.34%. The fund has three and five-year returns of 3.80% and 6.72%, respectively.
Schwab Health Care (SWHFX - Free Report) seeks long-term capital appreciation by primarily investing in securities of companies in the healthcare sector. The fund invests the majority of its net assets in the equity securities of such companies which may include health care facilities operations, pharmaceutical and biotechnology companies, and medical product manufacturers and suppliers etc.
This Sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
SWHFXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.80%, which is below the category average of 1.28%. The fund has three and five-year returns of 6.13% and 9.51%, respectively.
Fidelity Select Consumer Discret Port (FSCPX - Free Report) aims to gain capital by investing the majority of its assets in securities of companies that are primarily engaged in design, manufacture and distribution of consumer discretionary products. The fund invests in U.S. and non-U.S. stocks alike. Among its top holdings, the fund has companies such as Amazon, Home Depot and McDonald’s etc.
This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSCPXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.34%. The fund has three and five-year returns of 8.06% and 7.95%, 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 >>