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Retail Funds Pushed by High Demand Amid Coronavirus: 2 Picks
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The coronavirus pandemic, which has made its presence felt since the beginning of this year, has given supermarkets and retailers of food products and essential goods an unexpected boost. First, consumers took to panic-buying and stocking their pantries. Second, more consumers started to order their products online, leading to an increase in online grocery and essential products sales.
Mutual fund investors could thus take a look at the funds that are well positioned to gain from these trends and invest accordingly.
Retail Giants Benefit From Lofty Demand
Be it Amazon.com Inc, Walmart, Target, Dollar General, Costco or Dollar Tree, retail and supermarket giants have gained immensely from the rise in demand over the past few weeks for products such as toilet paper, paper towels, hand sanitizers, soap, toothpaste, baby food, dairy products and frozen food.
In fact, so huge was this demand that some of these retailers had to hire new temporary associates, and warehouse and delivery workers to meet consumers’ needs. Earlier this month, Amazon said that it had hired 100,000 new workers for its numerous distribution centers and plans to hire 75,000 more. The retail giant also said that it expects to spend more than $500 million in pay raises for its employees.
Discount retail chains Dollar General and Dollar Tree also announced in March that they plan to hire thousands of workers. The former plans to hire about 50,000 employees by April-end.The company operates more than 16,300 stores across 45 states and about 75% of the country’s population lives within five miles of a Dollar General store.
In spite of the operational challenges retail businesses are currently facing, these companies are doing pretty well, owing to the spike in demand for food and essential products. In addition, even when the strict social distancing measures are removed, most consumers could continue shopping for groceries online.
2 Funds to Buy
We have, therefore, selected two mutual funds that invest in retailers. Both of these fundscarry a Zacks Mutual Fund Rank #2 (Buy). In addition, the minimum initial investment for these funds 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).
The fund aims for capital growth. The fund invests the majority of its assets in securities of companies engaged in manufacturing and marketing consumer discretionary products. The non-diversified fund invests in both U.S. and non-U.S. issuers. FSCPX mostly invests in common stocks of companies.
This Sector-Other product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 4.1% over the 3-year and 4.9% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Consumer Discretionary Portfolio, as of the last filing, allocates its assets in top two major groups — Retail Trade and Non-Durable. Further, as of the last filing, Amazon.com Inc, McDonald's Corp. and Dollar Tree Inc. were the top holdings for FSCPX.
FSCPXwas incepted on Jun 29, 1990 and is managed by Fidelity Management & Research Company. The fund carries an expense ratio of 0.78% and requires a minimal initial investment of $0.
The fund aims for capital appreciation. It invests the majority of its assets in securities of companies that are engaged in the production and marketing of finished goods and services primarily to individual consumers. The non-diversified fund, which mostly invests in common stocks of companies, invests in both U.S. and non-U.S. issuers.
This Sector-Other product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 8.5% over the 3-year and 9.9% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Retailing Portfolio, as of the last filing, allocates its assets in top two major groups — Retail Trade and Technology. Further, as of the last filing, Amazon.com Inc, Dollar Tree and Dollar General were the top holdings for FSRPX.
FSRPX was incepted on Dec 16, 1985 and is managed by Fidelity Management & Research Company. The fund carries an expense ratio of 0.76% and requires a minimal initial investment of $0.
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Retail Funds Pushed by High Demand Amid Coronavirus: 2 Picks
The coronavirus pandemic, which has made its presence felt since the beginning of this year, has given supermarkets and retailers of food products and essential goods an unexpected boost. First, consumers took to panic-buying and stocking their pantries. Second, more consumers started to order their products online, leading to an increase in online grocery and essential products sales.
Mutual fund investors could thus take a look at the funds that are well positioned to gain from these trends and invest accordingly.
Retail Giants Benefit From Lofty Demand
Be it Amazon.com Inc, Walmart, Target, Dollar General, Costco or Dollar Tree, retail and supermarket giants have gained immensely from the rise in demand over the past few weeks for products such as toilet paper, paper towels, hand sanitizers, soap, toothpaste, baby food, dairy products and frozen food.
In fact, so huge was this demand that some of these retailers had to hire new temporary associates, and warehouse and delivery workers to meet consumers’ needs. Earlier this month, Amazon said that it had hired 100,000 new workers for its numerous distribution centers and plans to hire 75,000 more. The retail giant also said that it expects to spend more than $500 million in pay raises for its employees.
Discount retail chains Dollar General and Dollar Tree also announced in March that they plan to hire thousands of workers. The former plans to hire about 50,000 employees by April-end.The company operates more than 16,300 stores across 45 states and about 75% of the country’s population lives within five miles of a Dollar General store.
In spite of the operational challenges retail businesses are currently facing, these companies are doing pretty well, owing to the spike in demand for food and essential products. In addition, even when the strict social distancing measures are removed, most consumers could continue shopping for groceries online.
2 Funds to Buy
We have, therefore, selected two mutual funds that invest in retailers. Both of these fundscarry a Zacks Mutual Fund Rank #2 (Buy). In addition, the minimum initial investment for these funds 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 Consumer Discretionary Portfolio (FSCPX - Free Report)
The fund aims for capital growth. The fund invests the majority of its assets in securities of companies engaged in manufacturing and marketing consumer discretionary products. The non-diversified fund invests in both U.S. and non-U.S. issuers. FSCPX mostly invests in common stocks of companies.
This Sector-Other product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 4.1% over the 3-year and 4.9% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Consumer Discretionary Portfolio, as of the last filing, allocates its assets in top two major groups — Retail Trade and Non-Durable. Further, as of the last filing, Amazon.com Inc, McDonald's Corp. and Dollar Tree Inc. were the top holdings for FSCPX.
FSCPXwas incepted on Jun 29, 1990 and is managed by Fidelity Management & Research Company. The fund carries an expense ratio of 0.78% and requires a minimal initial investment of $0.
Fidelity Select Retailing Portfolio (FSRPX - Free Report)
The fund aims for capital appreciation. It invests the majority of its assets in securities of companies that are engaged in the production and marketing of finished goods and services primarily to individual consumers. The non-diversified fund, which mostly invests in common stocks of companies, invests in both U.S. and non-U.S. issuers.
This Sector-Other product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 8.5% over the 3-year and 9.9% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Retailing Portfolio, as of the last filing, allocates its assets in top two major groups — Retail Trade and Technology. Further, as of the last filing, Amazon.com Inc, Dollar Tree and Dollar General were the top holdings for FSRPX.
FSRPX was incepted on Dec 16, 1985 and is managed by Fidelity Management & Research Company. The fund carries an expense ratio of 0.76% and requires a minimal initial investment of $0.
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 >>