Orders for U.S.-made long-lasting goods jumped sharply in June, indicating that despite rising costs and cautious spending, soaring demand for durable goods is still driving orders. This definitely is a good sign amid other factors indicating a cooling economy.

The sharp rise in orders for durable goods can be attributed to higher orders for defense aircraft. However, overall demand for durable goods remained high, which indicates that several sectors are still going strong and haven’t succumbed to inflationary pressures.  Thus, funds like Fidelity Select Industrials Portfolio (FCYIX Quick QuoteFCYIX - Free Report) , Fidelity Select Automotive Portfolio (FSAVX Quick QuoteFSAVX - Free Report) and Fidelity Select Defense & Aerospace Portfolio (FSDAX Quick QuoteFSDAX - Free Report) are likely to benefit in the near term.

Orders for Durable Goods Soar

The Commerce Department reported on Jul 27 that orders for durable goods made in U.S. factories that are meant to last at least three years jumped 1.9% in June to a seasonally adjusted $272.6 billion. Economists had predicted a decline of 0.5% in orders.

The jump in June orders was seen across several categories. However, the bulk of the orders was for military aircraft and defense equipment. Besides, orders were also high for motor vehicles, including transportation machinery. Excluding defense, orders for durable goods climbed 0.4%, in line with expectations.

Defense aircraft and component orders shot up by an astounding 80.6% to $9.76 billion.

In June, orders for essential capital goods climbed by 0.5%. Core capital goods shipments are a key component used to calculate equipment investment in the GDP measurement.

Additionally, orders for computers and other associated goods increased 5.9%, reaching $1.95 billion. Additionally, orders for electrical devices and equipment increased by 2.5% to $13.71 billion.

Shipments of manufactured capital goods rose by $0.7 billion, or 0.3%, to $269.6 billion in June.

Although rising costs are dampening consumer confidence, the gain in June once again proves that producers are still confident.

People spent more on commodities and less on services during the peak of the pandemic. However, they have once again started spending more on services as restrictions began to be relaxed and the economy started functioning at its optimum level.

However, demand for goods has continued to soar, which is driving orders.

3 Best Choices

We have, thus, selected three mutual funds with significant exposure to the manufacturing sector, each carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Industrials Portfolio fund aims for capital appreciation. FCYIX 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. Fidelity Select Industrials Portfolio is a non-diversified fund.

Fidelity Select Industrials Portfolio fund 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 #1. FCYIX has returned 1.9% and 4.8% over the past three and five years, respectively.

Fidelity Select Automotive Portfolio aims for capital appreciation. FSAVX invests most of its assets in common stocks of companies engaged in manufacturing automobiles, trucks, specialty vehicles, parts, tires and related services.

Fidelity Select Automotive Portfolio fund 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 #1. FSAVX has returned 18.5% and 13.2% over the past three and five years, respectively.

Fidelity Select Defense & Aerospace Portfolio invests a huge portion of its assets in the securities of companies involved primarily in the research, manufacturing, and sale of products and services, per the defense or aerospace industries. FSDAX seeks capital growth by investing in both U.S. and non-U.S. companies.

Fidelity Select Defense & Aerospace Portfolio fundhas 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 has a Zacks Mutual Fund Rank #2 and has returned 6.5% over the past five-year benchmark.

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