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Rise in Personal Spending to Boost These 4 Cyclical Funds

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Economic data for January has been quite promising, pointing toward a rebound from the coronavirus pandemic-led slump. The vaccine rollout and steady decline in coronavirus cases have boosted confidence and helped the consumer confidence index rise to a three-month high of 91.3 in February. Additionally, the $600 worth stimulus payments handed over to American households helped. Other reports from January also throw light on the economy’s improving health.

As consumer confidence treads higher, it will help the cyclical sector to gain momentum. This calls for investment in mutual funds with significant exposure to cyclicals.

Personal Spending Edges Up

In January, American consumers spent the maximum in the last seven month as the government handed out more pandemic relief to low-income households and coronavirus cases declined. On Feb 26, the Commerce Department reported that consumer spending jumped 2.4% in January versus the 0.4% decline in December. Though the consensus estimate called for a 2.8% increase, consumer spending in January rose the highest since last June and put an end to the two-straight months of declines.

Americans spent on purchasing motor vehicles, recreation goods, food and beverages. There was significant spending across the service sector that includes hotel accommodations, restaurants, and doctor visits.

Personal Income Jumps

On Feb 26, the Bureau of Economic Analysis reported that personal income jumped 10% in January, the largest increase since April 2020 when the government disbursed the first round of stimulus checks. The consensus estimate for January suggested a 9.4% increase in comparison to the previous month’s rise of 0.6%. Income in January was boosted by a 52% surge in government transfers and was also supported by a 0.7% rise in wages. Americans also stashed away some of the stimulus money that lifted saving rate to 20.5% in January from 13.4% in the month before.

4 Fund to Buy Now

Given such a positive data and strong prospects, we shortlisted four funds 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 the potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on the fund’s past performance but also on its 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 the reasons for 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) fund aims for capital appreciation. This non-diversified fund invests majority of assets in the common stocks of companies that are engaged in the manufacturing and distribution of consumer discretionary products and services.

This Zacks Sector – Other product has a history of positive total returns for more than 10 years. Specifically, FSCPX has returned 19.5% and 16.8% 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.

FSCPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.22%.

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 more than 10 years. Specifically, FSRPX has returned 24% and 20.2% 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.

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 Leisure Portfolio (FDLSX - Free Report) fund aims at capital appreciation. This non-diversified fund normally invests majority of assets in the 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 product has a history of positive total returns for more than 10 years. Specifically, FDLSX has returned 12.3% and 14.2% 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.

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%.

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 21.9% and 16.1% 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 #2 and an annual expense ratio of 1.00%, which is below the category average of 1.22%.

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