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U.S. Unemployment Rate Slides in August: 4 Fund Picks

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Per the U.S. Bureau of Labor Statistics’ report on Sep 4, the unemployment rate fell to 8.4% in August, by far the lowest since the coronavirus shutdown in March. The rate slipped from July’s 10.2% and beat the consensus estimate of 9.8%. The U.S. economy continued to climb its way out of the pandemic downturn and added 1.371 million new jobs in August.

The report also highlights that in August several sectors saw big job gains. The retail sector added 249,000 jobs and professional and business services rose by 197,000. The leisure and hospitality sector, which is the hardest-hit during the pandemic, saw 174,000 job additions as most bars and restaurants started hiring employees. Further, education and health services added 147,000 jobs and transportation added 78,000 jobs due to a big gain in warehousing and storage jobs.

The coronavirus pandemic has wrecked havoc globally and hammered businesses big and small. In fact, the pandemic had erased the nearly consistent record-low unemployment rate of 3.5% that the United States had maintained last year and at the beginning of 2020. As the pandemic struck and businesses were forced to shut down operations, the rate surged up to 14.7% in April with million standing jobless.

The positive jobs report for August comes amid a pile of mostly positive economic data that include sharp rebounds in retail sales, real estate and manufacturing from their coronavirus lows.

4 Funds to Buy

We have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to gain from such positive economic data. Moreover, these funds have encouraging five-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 Leisure Portfolio (FDLSX - Free Report) fund aims for capital appreciation. This fund invests the majority of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries. FDLSX’s portfolio consists of restaurant stocks like Chipotle Mexican Grill and Starbucks.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.2% over the past five years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FDLSXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.27%.

Fidelity Select Retailing Portfolio (FSRPX - Free Report) fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services primarily to individual consumers. FSRPX’s portfolio consists of retailers like Lowe’s and The Home Depot.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 16.6% over the past five-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FSRPXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is below the category average of 1.27%.

Fidelity Select Financial Services Portfolio (FIDSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in the common stock of companies engaged in providing financial services to consumers and the industry.

This Sector - Finance product has a history of positive total returns for over 10 years. Specifically, the fund has returned 3.4% over the past five-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FIDSXhas a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.43%.

Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) fund aims for capital appreciation. The non-diversified fund normally invests the majority of its assets in common stocks of companies engaged in the manufacture and distribution of consumer discretionary products and services. FSCPX’s portfolio consists of companies like Starbucks and Nike.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 11.3% over the past five years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FSCPXhas a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.27%.

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