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3 Mutual Funds to Buy as Consumer Sentiment Jumps in March

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On Mar 12, the University of Michigan released the initial reading of its consumer sentiment index for March. Consumer sentiments jumped to 83 in March, beating the consensus estimate of 78.6 and surpassing February’s reading of 76.8. So far, March’s preliminary reading is the highest since the U.S. economy went into lockdown due to the pandemic last year. The preliminary reading for March indicates an improvement in consumer sentiments, which had slipped to 71.8 last April.

Per the report, anticipation of $1,400 stimulus checks as part of Biden’s relief package fueled consumer sentiments. Consumers were also upbeat about the steady decline in the number of COVID-19 cases and progress in vaccination. On Mar 11, President Joe Biden signed the $1.9-trillion fiscal stimulus bill, called the American Rescue Plan, into law. This will send out $1,400 in stimulus payments to eligible individuals, among others. And the vaccination drive in the United States is set to receive a boost as Biden announced that he will direct states to make all adults aged 18 years or above eligible for vaccination by May 1.

Prospects for the consumer discretionary sector seem bright in such a scenario. Consumers can finally plan vacations and go back to shopping and celebrations. Jump in sentiments should also fuel the retail space and per the National Retail Federation (“NRF”) report, retail sales are set to increase between 6.5% and 8.2% to more than $4.33 trillion this year.

3 Top Fund Choices

American consumers hold a positive outlook for the economy and given such a scenario, we have shortlisted three 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 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 22.3% and 22.5% 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 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 Leisure Portfolio (FDLSX - Free Report) aims for capital appreciation. This non-diversified fund normally invests majority of 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 14.5% and 15.8% 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.

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

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