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Vaccine Progress to Boost These 4 Mutual Funds

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Pandemic-imposed travel bans and lockdowns have hit several businesses. Any positive news on vaccine development gives a boost to these companies, especially those that benefit from economic reopening and easing of social-distancing norms. Additionally, lower-income group ofworkers in the leisure and recreation, retail and transportation industries have been bearing the brunt of the crisis for long as employers have been retrenching workers. A breakthrough in coronavirus vaccine will not only allow these industries to return to business but also lift the broader economy.

On Nov 9, BioNTech and Pfizer reported that their COVID-19 vaccine candidate, BNT162b2, has an efficacy rate of 90% in the Phase 3 clinical trial, where patients were assessed seven days after the second dose was administered. The experimental mRNA vaccine, currently in Phase 3 clinical trial, can protect most people from symptomatic infections. BioNTech and Pfizer are now the first to introduce a COVID-19 vaccine to the U.S market.

An announcement by Eli Lilly & Co. followed soon that day, as the FDA approved Eli Lily’s COVID-19 antibody treatment, called bamlanivimab, for emergency use. Bamlanivimab has been seen as a potential treatment for those patients with mild to moderate infection and leads to reduced viral load as well as lower rates of symptoms and hospitalization. Additionally on Nov 16, Moderna also posted positive results from its Phase 3 trial. Moderna's mRNA-based vaccine has shown efficacy of 94.5% in its first interim data analysis.

Development of coronavirus vaccine encourages travelers who are planning to go for vacation or for work, and this will help to prevent disease spread within and between countries. Additionally, airline companies can remove restriction on number of passengers per flight and hence prevent losses incurred due to social distancing norms. Also, in the retail space, social distancing norms had prevented many brick and mortar stores from allowing customers from trying out apparels and limited the number of foot counts in a particular time. A vaccine development encourages both businesses and customers to return to the normal ways of travelling and purchases.

A breakthrough in COVID-19 vaccine will also result in investors’ interest shift. Hence, investors will shift from work-or-stay-at-home companies to economically-sensitive companies or cyclical industries that tend to earn greater returns during the earlier part of an economic recovery.With availability of a vaccine or cure, travel activities are expected to pick up and employees can return to work and people can start visiting public places.

Our Top Fund Choicesw

Given the progress in the coronavirus vaccine front, we have highlighted four mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) from the retail, leisure, automotive and transportation space that are poised to grow. Moreover, these funds have encouraging annual returns. Additionally, the minimum initial investment is within $5000.

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.

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 Transportation Portfolio (FSRFX - Free Report) fund aims for capital growth. The non-diversified fund mostly invests majority of assets in common stocks of companies that offer transportation services or are engaged in activities in the transportation sector.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 4.3% and 8.4% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRFX has a Zacks Mutual Fund Rank #1 and anannual expense ratio of 0.79%, which is below the category average of 1.04%.

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.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 20.9% and nearly 16% over the past three and five-year period, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is below the category average of 1.22%.

Fidelity Select Automotive Portfolio (FSAVX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of 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 12.6% and 10.2% over the past three and five years, respectively. 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 Mutual Fund Rank #1 and an annual expense ratio of 1.00%, which is below the category average of 1.22%.

Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies, principally engaged in the design, production, or distribution of goods or services in the leisure industries.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 6.9% and 8.7% over the past three and five years, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FDLSX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.22%.

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