We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Funds to Buy as US Manufacturing Sector Continues to Expand
Read MoreHide Full Article
The U.S. manufacturing sector expanded in November despite acute labor and supply-chain constraints. The trajectory for the American manufacturing space in 2022 is positive, continuing the recovery trend and momentum gained in 2021, thanks to vaccine rollout and high demand. Industrial production and capacity utilization have been substantially higher and surpassed pre-pandemic levels midyear.
November’s Institute for Supply Management (ISM) Manufacturing index and October’s factory orders raise optimism, showing that the space can operate through the turbulence and is poised to compete in the next growth period. Investors can take this opportunity to invest in Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) , Fidelity Select Chemicals Portfolio (FSCHX - Free Report) , Fidelity Select Industrials Portfolio (FCYIX - Free Report) and Fidelity Select Automotive Portfolio (FSAVX - Free Report) .
On Nov 1, the ISM reported that manufacturing activity expanded to a reading of 61.1 from 60.8 in October, almost in line with consensus estimate. Manufacturing activities have accelerated for 18 months straight despite factories experiencing delayed raw materials delivery. The sub-indexes, namely the production index, rose to 61.5 in November from 59.3 in the prior month, while the new orders index bumped up to 61.8 in November from 59.8. Employment that has been a major concern for the sector also witnessed growth, rising to 53.3 from 52 in October.
In a separate report released on Nov 3, the U.S. Census Bureau reported that new orders for manufactured goods or factory orders are up 1% or increased $5.1 billion in October. Orders surged 17.1% on a year-on-year basis. Shipments have risen 2% for the month, and factory inventories increased 0.8%. Orders for non-defense capital goods, excluding aircraft, increased 0.7%.
Manufacturers are raising wages to fill up the record vacancies, but the workforce shortage is likely to limit higher productivity and growth next year. Additionally, supply-chain constraints are acute and still unfolding. With the rise of environmental, social, and governance (ESG) factors putting stress on redefining and elevating sustainability across the manufacturing sector, it may face several roadblocks. However, elevated demand for goods will continue, and acceleration in digital transformation and adoption of cloud and robotics could bring operational efficiencies to scale, boosting production at smart factory floors.
4 Top Fund Picks
The U.S. manufacturing space will gain steam given the current positive economic indicators against labor and supply-chain challenges. We have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to grow. Moreover, these funds have encouraging five-year returns and 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 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 Defense & Aerospace Portfolio fund invests a huge portion of its assets in the securities of companies involved primarily in the research, manufacture, and sale of products and services, per the defense or aerospace industries. FSDAX seeks capital growth by investing in U.S. and non-U.S. companies.
This Sector - Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Defense & Aerospace Portfolio carries a Zacks Mutual Fund Rank #1 and has returned 6.1% and 12% over the past three and five-year benchmarks, respectively.
Fidelity Select Chemicals Portfolio fund aims for capital appreciation. The fund typically invests a majority of 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. FSCHX is a non-diversified fund.
This Sector - Other product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Chemicals Portfolio has a Zacks Mutual Fund Rank #1 and has returned 14.1% and 11.9% over the past three and five years, respectively.
Fidelity Select Industrials Portfolio fund aims for capital appreciation. This fund invests typically a large portion of its assets in the common stock of companies, principally engaged in the research, development, manufacture, distribution, supply, or sale of industrial materials, equipment, products, or services. FCYIX is a non-diversified fund.
This Sector - Other product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Industrials Portfolio has a Zacks Mutual Fund Rank #2 and has returned 14.4% and 13.2% over the past three and five years, respectively.
Fidelity Select Automotive Portfolio fund aims for capital appreciation. This fund invests most assets in common stocks of companies engaged in manufacturing automobiles, trucks, specialty vehicles, parts, tires, and related services.
This Sector - Other product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Automotive Portfolio has a Zacks Mutual Fund Rank #2 and has returned 35.1% and 24.4% over the past three and five years, respectively.
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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
4 Funds to Buy as US Manufacturing Sector Continues to Expand
The U.S. manufacturing sector expanded in November despite acute labor and supply-chain constraints. The trajectory for the American manufacturing space in 2022 is positive, continuing the recovery trend and momentum gained in 2021, thanks to vaccine rollout and high demand. Industrial production and capacity utilization have been substantially higher and surpassed pre-pandemic levels midyear.
November’s Institute for Supply Management (ISM) Manufacturing index and October’s factory orders raise optimism, showing that the space can operate through the turbulence and is poised to compete in the next growth period. Investors can take this opportunity to invest in Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) , Fidelity Select Chemicals Portfolio (FSCHX - Free Report) , Fidelity Select Industrials Portfolio (FCYIX - Free Report) and Fidelity Select Automotive Portfolio (FSAVX - Free Report) .
On Nov 1, the ISM reported that manufacturing activity expanded to a reading of 61.1 from 60.8 in October, almost in line with consensus estimate. Manufacturing activities have accelerated for 18 months straight despite factories experiencing delayed raw materials delivery. The sub-indexes, namely the production index, rose to 61.5 in November from 59.3 in the prior month, while the new orders index bumped up to 61.8 in November from 59.8. Employment that has been a major concern for the sector also witnessed growth, rising to 53.3 from 52 in October.
In a separate report released on Nov 3, the U.S. Census Bureau reported that new orders for manufactured goods or factory orders are up 1% or increased $5.1 billion in October. Orders surged 17.1% on a year-on-year basis. Shipments have risen 2% for the month, and factory inventories increased 0.8%. Orders for non-defense capital goods, excluding aircraft, increased 0.7%.
Manufacturers are raising wages to fill up the record vacancies, but the workforce shortage is likely to limit higher productivity and growth next year. Additionally, supply-chain constraints are acute and still unfolding. With the rise of environmental, social, and governance (ESG) factors putting stress on redefining and elevating sustainability across the manufacturing sector, it may face several roadblocks. However, elevated demand for goods will continue, and acceleration in digital transformation and adoption of cloud and robotics could bring operational efficiencies to scale, boosting production at smart factory floors.
4 Top Fund Picks
The U.S. manufacturing space will gain steam given the current positive economic indicators against labor and supply-chain challenges. We have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to grow. Moreover, these funds have encouraging five-year returns and 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 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 Defense & Aerospace Portfolio fund invests a huge portion of its assets in the securities of companies involved primarily in the research, manufacture, and sale of products and services, per the defense or aerospace industries. FSDAX seeks capital growth by investing in U.S. and non-U.S. companies.
This Sector - Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Defense & Aerospace Portfolio carries a Zacks Mutual Fund Rank #1 and has returned 6.1% and 12% over the past three and five-year benchmarks, respectively.
Fidelity Select Chemicals Portfolio fund aims for capital appreciation. The fund typically invests a majority of 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. FSCHX is a non-diversified fund.
This Sector - Other product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Chemicals Portfolio has a Zacks Mutual Fund Rank #1 and has returned 14.1% and 11.9% over the past three and five years, respectively.
Fidelity Select Industrials Portfolio fund aims for capital appreciation. This fund invests typically a large portion of its assets in the common stock of companies, principally engaged in the research, development, manufacture, distribution, supply, or sale of industrial materials, equipment, products, or services. FCYIX is a non-diversified fund.
This Sector - Other product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Industrials Portfolio has a Zacks Mutual Fund Rank #2 and has returned 14.4% and 13.2% over the past three and five years, respectively.
Fidelity Select Automotive Portfolio fund aims for capital appreciation. This fund invests most assets in common stocks of companies engaged in manufacturing automobiles, trucks, specialty vehicles, parts, tires, and related services.
This Sector - Other product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Automotive Portfolio has a Zacks Mutual Fund Rank #2 and has returned 35.1% and 24.4% over the past three and five years, respectively.
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 >>