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US Service Sector Grew Briskly in November: 4 Fund Picks
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Labor shortages, transportation delays and supply constraints are constantly disrupting economic recovery and with the fears of the omicron variant, markets are struggling to maintain the northward climb. Despite all adversities, the U.S. service sector, rather all its 18 service industries, have reported growth in November. Banks, retailers and drug stores have witnessed substantial growth last month. Hence, investors can consider these mutual funds-–Fidelity Select Retailing Portfolio (FSRPX - Free Report) , Fidelity Select Financial Services Portfolio (FIDSX - Free Report) , Fidelity Select Leisure Portfolio (FDLSX - Free Report) and Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) .
On Dec 3, the Institute for Supply Management reported that its services PMI climbed to 69.1% in November from 66.7% in the previous month, marking the biggest jump on record. The consensus estimate was of a decline to 65%. Coming to the sub-indexes, the Business Activity Index and the New Orders Index reached 74.6% and 69.7%, respectively, driving the major index upward.
November’s report highlights that demand is still high, as Americans are willing to spend. However, the biggest issue is supplying all the services that customers want. The dearth of people to fill a near-record number of open jobs and supply-side constraints are contributing toward rising prices, which in turn is leading to a surge in inflation, nearly at a 31-year high. The Prices Index reached its third-highest reading ever at 82.3%, but is marginally lower (0.6 percentage points) from October. The employment sub-index also rose to 56.5% in November from 51.6% in the prior month. This can be linked with the unemployment rate that fell by 0.4 percentage points to 4.2% in November.
Even with factors like shortage of labor and materials, and omicron fears, the service sector is on a roll. In fact, with the holiday season knocking at the doors, Americans will hold the appetite for goods and services, even if they have to pay more.According to NRF’s forecast, holiday sales, considering both November and December, are expected to grow between 8.5% and 10.5%, reaching $843.4-$859 billion.
4 Mutual Funds to Buy
Given the fastest pace of growth in the service sector, we have shortlisted four mutual funds that include retailers, travel & leisure service and products providers, and financial service providers. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their 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 on 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 Retailing Portfolio fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in securities of companies that merchandise finished goods and services to individual customers. FSRPX invests in both U.S. and non-U.S. stocks.
This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned 25.9% and 23.6% in the past three and five years, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Retailing Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, below the category average of 0.79%.
Fidelity Select Financial Services Portfoliofund aims for capital appreciation. This non-diversified fund invests the majority of 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, FIDSX has three and five-year return of 19% and 16.9%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Financial Services Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77% versus the category average of 1.08%.
Fidelity Select Leisure Portfolio fund aims for capital appreciation. The fund invests at least 80% of its assets in companies that design, produce or distribute goods or services in the leisure industries. This non-diversified fund invests in both domestic and foreign stocks.
This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FDLSX has three and five-year returns of 20.1% and 17.9%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Leisure Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, below the category average of 0.79%.
Fidelity Select Consumer Discretionary Portfolio fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies that manufacture and distribute consumer discretionary goods and services. FSCPX invests in both domestic and foreign stocks.
This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FSCPX has three and five-year returns of 23.8% and 20.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Consumer Discretionary Portfolio has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, below the category average of 0.79%.
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US Service Sector Grew Briskly in November: 4 Fund Picks
Labor shortages, transportation delays and supply constraints are constantly disrupting economic recovery and with the fears of the omicron variant, markets are struggling to maintain the northward climb. Despite all adversities, the U.S. service sector, rather all its 18 service industries, have reported growth in November. Banks, retailers and drug stores have witnessed substantial growth last month. Hence, investors can consider these mutual funds-–Fidelity Select Retailing Portfolio (FSRPX - Free Report) , Fidelity Select Financial Services Portfolio (FIDSX - Free Report) , Fidelity Select Leisure Portfolio (FDLSX - Free Report) and Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) .
On Dec 3, the Institute for Supply Management reported that its services PMI climbed to 69.1% in November from 66.7% in the previous month, marking the biggest jump on record. The consensus estimate was of a decline to 65%. Coming to the sub-indexes, the Business Activity Index and the New Orders Index reached 74.6% and 69.7%, respectively, driving the major index upward.
November’s report highlights that demand is still high, as Americans are willing to spend. However, the biggest issue is supplying all the services that customers want. The dearth of people to fill a near-record number of open jobs and supply-side constraints are contributing toward rising prices, which in turn is leading to a surge in inflation, nearly at a 31-year high. The Prices Index reached its third-highest reading ever at 82.3%, but is marginally lower (0.6 percentage points) from October. The employment sub-index also rose to 56.5% in November from 51.6% in the prior month. This can be linked with the unemployment rate that fell by 0.4 percentage points to 4.2% in November.
Even with factors like shortage of labor and materials, and omicron fears, the service sector is on a roll. In fact, with the holiday season knocking at the doors, Americans will hold the appetite for goods and services, even if they have to pay more.According to NRF’s forecast, holiday sales, considering both November and December, are expected to grow between 8.5% and 10.5%, reaching $843.4-$859 billion.
4 Mutual Funds to Buy
Given the fastest pace of growth in the service sector, we have shortlisted four mutual funds that include retailers, travel & leisure service and products providers, and financial service providers. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their 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 on 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 Retailing Portfolio fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in securities of companies that merchandise finished goods and services to individual customers. FSRPX invests in both U.S. and non-U.S. stocks.
This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned 25.9% and 23.6% in the past three and five years, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Retailing Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, below the category average of 0.79%.
Fidelity Select Financial Services Portfoliofund aims for capital appreciation. This non-diversified fund invests the majority of 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, FIDSX has three and five-year return of 19% and 16.9%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Financial Services Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77% versus the category average of 1.08%.
Fidelity Select Leisure Portfolio fund aims for capital appreciation. The fund invests at least 80% of its assets in companies that design, produce or distribute goods or services in the leisure industries. This non-diversified fund invests in both domestic and foreign stocks.
This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FDLSX has three and five-year returns of 20.1% and 17.9%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Leisure Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, below the category average of 0.79%.
Fidelity Select Consumer Discretionary Portfolio fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies that manufacture and distribute consumer discretionary goods and services. FSCPX invests in both domestic and foreign stocks.
This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FSCPX has three and five-year returns of 23.8% and 20.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Consumer Discretionary Portfolio has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, below the category average of 0.79%.
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 >>