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Industrial Production Picks Up Pace in July: 3 Fund Choices
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Manufacturing activities ramped up in July, accelerated by motor vehicle output, despite supply-side bottlenecks. The Federal Reserve reportedon Aug 17 that industrial production increased 0.9% in July, surpassing June’s downwardly revised 0.2% increase and the consensus estimate of a 0.5% rise.
In the reported month, manufacturing activities recorded a 1.4% rise, and nearly half of the gain was attributed by automakers. In July, automakers trimmed or canceled their typical shutdowns for annual retooling, to work around the global semiconductor shortage, that has been plaguing the industry.
Production at auto plants rose 11.2%, however, vehicle assemblies were constrained by the persistent shortage of semiconductors and was 3.5% below the high hit in January 2021. Additionally, mining output rose 1.2%, driven by higher oil price which in turn is supporting drilling activities. Production of durable goods rose 2.4% and business equipment output increased 2.8%. Machinery; electrical equipment, appliances, and components; aerospace and miscellaneous transportation equipment; and miscellaneous manufacturing registered gains of 1.5% or more. In non-durable goods output, textile and product mills and plastics and rubber products saw the largest increase. Overall, non-durable goods output increased 0.3%.
Industrial production in July was 6.6% higher than the same period last year. However, it was 0.2% below the pre-pandemic or February 2020 level. The Fed’s report also highlights that capacity utilization for manufacturing increased 1.1 percentage points to 76.6% in July, beating the consensus estimate of 75.7%. Capacity utilization in July was the highest rate since the virus outbreak last year.
3 Fund Picks
The ramp-up in industrial production activities calls for investing in these three mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain. Moreover, these funds have encouraging three and five-year 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 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 Chemicals Portfolio (FSCHX - Free Report) fund seeks capital appreciation. The fund normally invests at least 80% of its assets in common stocks of companies, principally engaged in the research, development, manufacture, or marketing of products or services related to the chemical process industries.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.2% and 10.6% over the 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.
FSCHX has an annual expense ratio of 0.79%, which is below the category average of 1.11%.
Fidelity Select Materials Portfolio (FSDPX - Free Report) aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies principally engaged in the manufacture, mining, processing, or distribution of raw materials and intermediate goods.
This Sector – Energy product has a history of positive total returns for over 10 years. Specifically, FSDPX has three and five-year return of 8.1% and 10.7%, respectively. To see how this fund performed compared to its category and other #1 and 2 Ranked Mutual Funds, please click here.
FSDPX has an annual expense ratio of 0.80%, which is below the category average of 1.11%.
Fidelity Select Utilities Portfolio (FSUTX - Free Report) aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies primarily engaged in the utilities industry and companies generating most of their revenues from utility operations.
This Zacks Sector – Utilities has a history of positive total returns for more than 10 years. Specifically, FSUTX has returned 8.9% and 9.4% in 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.
FSUTX has an annual expense ratio of 0.76%, which is below the category average of 0.94%.
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Industrial Production Picks Up Pace in July: 3 Fund Choices
Manufacturing activities ramped up in July, accelerated by motor vehicle output, despite supply-side bottlenecks. The Federal Reserve reportedon Aug 17 that industrial production increased 0.9% in July, surpassing June’s downwardly revised 0.2% increase and the consensus estimate of a 0.5% rise.
In the reported month, manufacturing activities recorded a 1.4% rise, and nearly half of the gain was attributed by automakers. In July, automakers trimmed or canceled their typical shutdowns for annual retooling, to work around the global semiconductor shortage, that has been plaguing the industry.
Production at auto plants rose 11.2%, however, vehicle assemblies were constrained by the persistent shortage of semiconductors and was 3.5% below the high hit in January 2021. Additionally, mining output rose 1.2%, driven by higher oil price which in turn is supporting drilling activities. Production of durable goods rose 2.4% and business equipment output increased 2.8%. Machinery; electrical equipment, appliances, and components; aerospace and miscellaneous transportation equipment; and miscellaneous manufacturing registered gains of 1.5% or more. In non-durable goods output, textile and product mills and plastics and rubber products saw the largest increase. Overall, non-durable goods output increased 0.3%.
Industrial production in July was 6.6% higher than the same period last year. However, it was 0.2% below the pre-pandemic or February 2020 level. The Fed’s report also highlights that capacity utilization for manufacturing increased 1.1 percentage points to 76.6% in July, beating the consensus estimate of 75.7%. Capacity utilization in July was the highest rate since the virus outbreak last year.
3 Fund Picks
The ramp-up in industrial production activities calls for investing in these three mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain. Moreover, these funds have encouraging three and five-year 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 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 Chemicals Portfolio (FSCHX - Free Report) fund seeks capital appreciation. The fund normally invests at least 80% of its assets in common stocks of companies, principally engaged in the research, development, manufacture, or marketing of products or services related to the chemical process industries.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.2% and 10.6% over the 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.
FSCHX has an annual expense ratio of 0.79%, which is below the category average of 1.11%.
Fidelity Select Materials Portfolio (FSDPX - Free Report) aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies principally engaged in the manufacture, mining, processing, or distribution of raw materials and intermediate goods.
This Sector – Energy product has a history of positive total returns for over 10 years. Specifically, FSDPX has three and five-year return of 8.1% and 10.7%, respectively. To see how this fund performed compared to its category and other #1 and 2 Ranked Mutual Funds, please click here.
FSDPX has an annual expense ratio of 0.80%, which is below the category average of 1.11%.
Fidelity Select Utilities Portfolio (FSUTX - Free Report) aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies primarily engaged in the utilities industry and companies generating most of their revenues from utility operations.
This Zacks Sector – Utilities has a history of positive total returns for more than 10 years. Specifically, FSUTX has returned 8.9% and 9.4% in 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.
FSUTX has an annual expense ratio of 0.76%, which is below the category average of 0.94%.
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 >>