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3 Funds to Replace Tech Winners in 2021 on Easing Volatility
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Though the pandemic has thrown a curveball to consumer stocks haywire, technology stocks have been doing surprising well with a great number of people staying and working from home. The Technology Select Sector SPDR Fund (XLK) has jumped 41.7% so far this year compared with the S&P 500’s rise of 15.4%. The rally in technology stocks has helped the Nasdaq Composite add nearly 43% this year despite the pandemic-led slump.
The development of a viable coronavirus vaccine has cheered investors and is one of the factors pointing to a favorable turn for the market stepping into 2021. The two pacesetters in the vaccine race, Pfizer-BioNTech and Moderna, have received emergency use authorization from the FDA for their respective coronavirus vaccines. In fact, last week, Pfizer-BioNTech announced a second deal with the U.S. government to supply an additional 100 million doses by the end of July 2021. This deal reaches the total number of doses available for American to 200 million. Notably, the government aims to vaccinate 20 million Americans by the end of next year.
Along with that, on Dec 26, President Donald Trump signed the new coronavirus relief package of $900 billion into law. A $600 stimulus check for every household and the revival of Pandemic Unemployment Assistance, rent payment forgiveness and a host of other things have boosted sentiments. Additionally, travel stocks that suffered the most due to the pandemic received airline payroll support and are part of more than $45 billion of transportation relief funds. Airlines companies have advanced in the past few sessions and are set to receive $15 billion in additional payroll assistance under the new stimulus aid.
Also, the Federal Reserve will be keeping rates near zero in 2021 to help ramp up economic activities and revive businesses from the coronavirus-induced slowdown. The Fed will not hike rates until 2023 and this will in turn promote the investing environment. In such a scenario, investors can easily look into other mutual funds than those focused on technology as these sectors will continue to grow with economic revival.
3 Funds to Buy
Given the positive market prospects in 2021, we have shortlisted three funds from the consumer discretionary and banking services sectors that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to grow. 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 Retailing Portfolio (FSRPX - Free Report) 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. FSRPX has returned 20.9% and nearly 16% 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.
FSRPX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.74%, which is below the category average of 1.22%.
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests 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 5.6% 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.
FIDSX has a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.34%.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) aims for capital appreciation. This non-diversified fund normally invests majority of its assets in common stocks of companies that are mostly engaged in the design, production, or distribution of goods or services in the leisure industries.
This Zacks Sector – Other has a history of positive total returns for more than 10 years. FDLSX 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, a Zacks Mutual Fund Rank #2, has an annual expense ratio of 0.76%, which is below the category average of 1.22%.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.
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3 Funds to Replace Tech Winners in 2021 on Easing Volatility
Though the pandemic has thrown a curveball to consumer stocks haywire, technology stocks have been doing surprising well with a great number of people staying and working from home. The Technology Select Sector SPDR Fund (XLK) has jumped 41.7% so far this year compared with the S&P 500’s rise of 15.4%. The rally in technology stocks has helped the Nasdaq Composite add nearly 43% this year despite the pandemic-led slump.
The development of a viable coronavirus vaccine has cheered investors and is one of the factors pointing to a favorable turn for the market stepping into 2021. The two pacesetters in the vaccine race, Pfizer-BioNTech and Moderna, have received emergency use authorization from the FDA for their respective coronavirus vaccines. In fact, last week, Pfizer-BioNTech announced a second deal with the U.S. government to supply an additional 100 million doses by the end of July 2021. This deal reaches the total number of doses available for American to 200 million. Notably, the government aims to vaccinate 20 million Americans by the end of next year.
Along with that, on Dec 26, President Donald Trump signed the new coronavirus relief package of $900 billion into law. A $600 stimulus check for every household and the revival of Pandemic Unemployment Assistance, rent payment forgiveness and a host of other things have boosted sentiments. Additionally, travel stocks that suffered the most due to the pandemic received airline payroll support and are part of more than $45 billion of transportation relief funds. Airlines companies have advanced in the past few sessions and are set to receive $15 billion in additional payroll assistance under the new stimulus aid.
Also, the Federal Reserve will be keeping rates near zero in 2021 to help ramp up economic activities and revive businesses from the coronavirus-induced slowdown. The Fed will not hike rates until 2023 and this will in turn promote the investing environment. In such a scenario, investors can easily look into other mutual funds than those focused on technology as these sectors will continue to grow with economic revival.
3 Funds to Buy
Given the positive market prospects in 2021, we have shortlisted three funds from the consumer discretionary and banking services sectors that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to grow. 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 Retailing Portfolio (FSRPX - Free Report) 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. FSRPX has returned 20.9% and nearly 16% 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.
FSRPX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.74%, which is below the category average of 1.22%.
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests 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 5.6% 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.
FIDSX has a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.34%.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) aims for capital appreciation. This non-diversified fund normally invests majority of its assets in common stocks of companies that are mostly engaged in the design, production, or distribution of goods or services in the leisure industries.
This Zacks Sector – Other has a history of positive total returns for more than 10 years. FDLSX 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, a Zacks Mutual Fund Rank #2, has an annual expense ratio of 0.76%, which is below the category average of 1.22%.
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 >>