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4 Funds to Buy as the Omicron COVID-19 Variant Rattles Markets

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The new omicron variant of COVID 19 has rattled markets, hampering Black Friday sales across the globe. Omicron, now a “variant of concern” according to the World Health Organization (WHO), was first detected in South Africa and is responsible for the recent spike in cases across Europe. As this highly mutated variant rampaged the reopening and economic recovery efforts, investors should invest in mutual funds that incorporate vaccine makers, gold, real estate and utilities for safety. Fidelity Select Utilities Portfolio (FSUTX - Free Report) , Fidelity Select Health Care Portfolio (FSPHX - Free Report) , Franklin Gold and Precious Metals Fund Class A (FKRCX - Free Report) and Fidelity Real Estate Investment Portfolio (FRESX - Free Report) are the funds to add to your list now.

The Dow, the S&P 500 and the Nasdaq Composite declined at least 2% in the three-hour-less trading day of Nov 26. Black Friday, a day when consumers are typically shopping for bargains, marks the beginning of the holiday season. However, sales took a hit on the alarming news from public health officials. The B.1.1.529 variant, symbolized by the Greek letter omicron, has undergone numerous mutations (more than 30) to the spike protein. The WHO has already issued warnings across Europe and Central Asia. Among the European companies, Austria has imposed at least a 10-day-long national lockdown to fight the resurgence. The Czech Republic has declared a 30-day emergency and announced several new restrictions. The United Kingdom has also banned flights from South Africa and five neighboring countries like Namibia, Lesotho, Eswatini, Zimbabwe and Botswana. Japan and Israel have closed their borders for foreigners, while Australia will review its plans to reopen borders to skilled migrants and students from Dec 1.

Among the rise in new COVID-19 cases, the WHO has informed that it could take "days to several weeks" to understand the severity of the variant and countries have to impose restrictions to prevent the spread. Restrictions and various measures taken to curtail the spread might impact economic recovery again. Hence, investors can limit investment to healthcare, gold, real estate and utilities mutual funds for now.

4 Mutual Fund Picks

Given the dreary scenario, we have shortlisted four funds from the utility, healthcare, gold and consumer staples sectors that are considered safe bets. These mutual funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and 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 fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also the likely future success of the fund.

The question here is why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges 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 Utilities Portfolio aims for capital appreciation. This non-diversified fund invests a 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, Fidelity Select Utilities Portfolio has returned 9.9% and 11.4% 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.

Fidelity Select Utilities Portfolio has an annual expense ratio of 0.76%, which is below the category average of 0.94%.

Fidelity Select Health Care Portfolio fund aims for capital appreciation. This non-diversified fund invests a majority of assets in common stocks of companies principally engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine.

This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 20.2% and 19.9% 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.

Fidelity Select Health Care Portfolio has an annual expense ratio of 0.69% versus the category average of 1.03%.

Franklin Gold and Precious Metals Fund Class A aims for capital appreciation and current income is a secondary consideration. This non-diversified fund invests most assets in securities of gold and precious metals operation companies located globally.

This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. Specifically, Franklin Gold and Precious Metals Fund Class A has returned 30.1% and 7% over the past three and five-year periods, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Franklin Gold and Precious Metals Fund Class A has an annual expense ratio of 0.93%, below the category average of 1.17%.

Fidelity Real Estate Investment Portfolio fund aims for above-average income and long-term capital growth, consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies principally engaged in the real estate industry and other real estate-related investments.

This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, Fidelity Real Estate Investment Portfolio has returned 13.1% and 9.2% 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.

Fidelity Real Estate Investment Portfolio has an annual expense ratio of 0.74% versus the category average of 1.08%.

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