Inflation in the United States might have slipped in the month of April, but remains at a high level. The Consumer Price Index increased by 0.3% in April on a seasonally adjusted basis after rising 1.2% in March, according to the U.S. Bureau of Labor Statistics.

Though the above data shows that the cost of goods and services is still elevated, it hasn’t dented consumers’ willingness to spend. The consumer spending index came in at 1.1% for the month of March as compared to 0.6% in February, according to the U.S. Bureau of Economic Analysis (“BEA”). Also, sales at U.S. retailers increased 0.9% in April, as the data from the U.S. Census Bureau indicated, despite sky-high inflation.

In fact, spending was broad-based. Growth in sales was seen at store retailers [4%], motor vehicle & parts dealers [2.2%], nonstore retailers [2.1%], food services & drinking places [2%], and electronics & appliances stores [1%]. Moreover, per the BEA, disposable personal income increased 0.5% in March, mostly due to an increase in compensation, proprietary income, personal income receipts on assets, and government social benefits, which indicates that consumers may increase their spending further in the near term.

Thus, with consumers willing to spend despite inflationary pressure, companies, which are selling discretionary items, involved in leisure activities, as well as retailers, are certainly poised to gain in the near future. Therefore, it’s prudent to invest in mutual funds that invest primarily in such companies and seek capital appreciation.

Additionally, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have highlighted three such mutual funds having maximum exposure to retail, leisure, and consumer discretionary, that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.

Fidelity Select Retailing Portfolio (FSRPX Quick QuoteFSRPX - Free Report) invests most of its net assets in securities of companies that are engaged in finished goods, merchandise and services mostly for individual consumers. FSRPX invests in issues of both foreign and domestic companies.

Boris Shepov has been the lead manager of FSRPX since May 16, 2018. Most of the fund’s exposure is in sectors such as Retail Trade, Consumer Durables and Services as of 4/30/2022.FSRPX’s three-year and five-year annualized returns are nearly 12.1% and 15.4%, respectively. FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.7%, which is less than the category average of 0.79%.

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 (FDLSX Quick QuoteFDLSX - Free Report) is known for investing the majority of its assets in securities of companies that are principally engaged in the design, production, or distribution of goods or services related to leisure industries. FDLSX invests in issues of both foreign and domestic companies.

William Hilkert has been the lead manager of FDLSX since August 17, 2020, and most of the fund’s exposure is in sectors such as Non-Durable, Technology and Retail Trade as of 4/30/2022.

FDLSX’s three-year and five-year annualized returns are 11.6% and 12.3%, respectively. FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, which is less than the category average of 0.79%.

Fidelity Select Consumer Discretionary Portfolio (FSCPX Quick QuoteFSCPX - Free Report) seeks to achieve its objective by investing the maximum portion of its net assets in securities of companies that are mostly engaged in the manufacture and distribution of consumer discretionary products and services. FSCPX invests in issues of both foreign and domestic companies.

Katherine Shaw has been the lead manager of FSCPX since August 3, 2017, and most of the fund’s exposure is in sectors such as Retail Trade, Consumer Durables and Non-Durable as of 4/30/2022.

FSCPX’s three-year and five-year annualized returns are 9.8% and 12.2%, respectively. FSCPX has a Zacks Mutual Fund Rank #3 and an annual expense ratio of 0.73% compared to 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 >>