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3 Solid Funds to Buy Amid Growing Market Volatility
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Wall Street has once again been gripped by volatility. After starting 2023 on a positive note, stocks tumbled in February on fears of the Fed continuing with its aggressive interest rate hike stance for a longer period. This saw stocks taking a beating in March.
Although markets bounced back slightly to end in positive territory in April, the participants are now reeling under fears of the economy slipping into a recession this year. Needless to say, Wall Street is in a catch-22 situation, with investors unable to gauge the future of the nation’s economic health.
Also, the Fed, as it had indicated, will go for another rate hike this week, making the situation difficult for consumers. It would thus be prudent to invest in defensive funds like utilities such as Fidelity Select Utilities Growth Portfolio (FSUTX - Free Report) , Fidelity Telecom and Utilities Fund (FIUIX - Free Report) and Fidelity Advisor Utilities Fund Class A (FUGAX - Free Report) , which are likely to strengthen ones portfolio.
Volatility Grips Markets
Wall Street closed April in the green, with the Dow and the S&P 500 finishing 2.5% and 1.5% higher, respectively. However, the Nasdaq Composite remained virtually flat. Markets have been volatile since mid-February. Although investors cheered every time inflation data showed signs of slowing, that euphoria was short-lived.
According to the Commerce Department, month over month, personal consumption expenditure (PCE) increased 0.1% in March, while it rose 4.2% on an annual basis, which was down sharply from the 5.1% rise in February.
However, personal consumption expenditure, excluding food and energy, or core PCE, increased 0.3% month over month in March. On a year-over-year basis, core PCE increased 4.6%, higher than the expectations of 4.5%. However, it was down 0.1% from February.
The latest data from the Commerce Department showed that although inflation is slowing, it remains elevated. Understandably, prices are rising and consumer spending is slowing.
This gives the Fed ample reasons to raise interest rates once again. The central bank is likely to hike interest rates by another 25 basis points this week, which will be its 10th straight interest rate hike in just over a year.
Market participants are now worrying that the Fed’s decision to continue with its aggressive rate hike policy could push the economy into a recession.
Given this situation, investing in utility stocks would be safe. The utilities sector is fundamentally sound and mature, given that demand for these services is typically resistant to changes in the economic cycle. These companies offer essential services like telecommunications, energy, gas, and water, which will always be in demand.
As a result, adding stocks from the utility basket typically gives a portfolio additional resilience in a volatile market environment. The sector is also known for the consistency and transparency of its profitability and cash flows.
3 Best Choices
We have selected three mutual funds with significant exposure to the utilities sector. The funds carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to gain from the above factors. Moreover, these funds have encouraging three and five-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 the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are 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 Growth Portfolio fund seeks capital appreciation by investing most of its net assets in securities of domestic and foreign companies engaged in the Utility business and earning the majority of their revenues from utility operations. FSUTX advisors use a fundamental approach like financial condition, industry position, as well as market and economic conditions to select investments.
Fidelity Select Utilities Portfolio fund has a history of positive total returns for more than 10 years. Specifically, FSUTX has returned nearly 13.6% and 9.6% over the past three and five-year periods, respectively. Fidelity Select Utilities Portfolio fund has a Zacks Mutual Fund Rank #1 (Strong Buy).
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Telecom and Utilities Fund invests most of its net assets in common stocks of domestic and international telecommunications services and utility companies. The FIUIX advisor chooses to invest in stocks based on fundamental approaches like the issuer’s financial condition, industry position, as well as market and economic conditions to select investments.
Fidelity Telecom and Utilities Fund has a history of positive total returns for more than 10 years. Specifically, FIUIX has returned nearly 11.1% and 7.8% over the past three and five-year periods, respectively. Fidelity Telecom and Utilities Fund has a Zacks Mutual Fund Rank #2 (Buy).
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Advisor Utilities Fund Class A fund aims for capital appreciation. FUGAX invests the lion’s share of assets in common stocks of companies principally engaged in the utilities industry as well as those companies that derive a majority of their revenues from their utility operations.
Fidelity Advisor Utilities Fund Class A fund has a history of positive total returns for more than 10 years. Specifically, FUGAX has returned nearly 13.2% and 9.1% over the past three and five-year periods, respectively. Fidelity Advisor Utilities Fund Class Afund has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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3 Solid Funds to Buy Amid Growing Market Volatility
Wall Street has once again been gripped by volatility. After starting 2023 on a positive note, stocks tumbled in February on fears of the Fed continuing with its aggressive interest rate hike stance for a longer period. This saw stocks taking a beating in March.
Although markets bounced back slightly to end in positive territory in April, the participants are now reeling under fears of the economy slipping into a recession this year. Needless to say, Wall Street is in a catch-22 situation, with investors unable to gauge the future of the nation’s economic health.
Also, the Fed, as it had indicated, will go for another rate hike this week, making the situation difficult for consumers. It would thus be prudent to invest in defensive funds like utilities such as Fidelity Select Utilities Growth Portfolio (FSUTX - Free Report) , Fidelity Telecom and Utilities Fund (FIUIX - Free Report) and Fidelity Advisor Utilities Fund Class A (FUGAX - Free Report) , which are likely to strengthen ones portfolio.
Volatility Grips Markets
Wall Street closed April in the green, with the Dow and the S&P 500 finishing 2.5% and 1.5% higher, respectively. However, the Nasdaq Composite remained virtually flat. Markets have been volatile since mid-February. Although investors cheered every time inflation data showed signs of slowing, that euphoria was short-lived.
According to the Commerce Department, month over month, personal consumption expenditure (PCE) increased 0.1% in March, while it rose 4.2% on an annual basis, which was down sharply from the 5.1% rise in February.
However, personal consumption expenditure, excluding food and energy, or core PCE, increased 0.3% month over month in March. On a year-over-year basis, core PCE increased 4.6%, higher than the expectations of 4.5%. However, it was down 0.1% from February.
The latest data from the Commerce Department showed that although inflation is slowing, it remains elevated. Understandably, prices are rising and consumer spending is slowing.
This gives the Fed ample reasons to raise interest rates once again. The central bank is likely to hike interest rates by another 25 basis points this week, which will be its 10th straight interest rate hike in just over a year.
Market participants are now worrying that the Fed’s decision to continue with its aggressive rate hike policy could push the economy into a recession.
Given this situation, investing in utility stocks would be safe. The utilities sector is fundamentally sound and mature, given that demand for these services is typically resistant to changes in the economic cycle. These companies offer essential services like telecommunications, energy, gas, and water, which will always be in demand.
As a result, adding stocks from the utility basket typically gives a portfolio additional resilience in a volatile market environment. The sector is also known for the consistency and transparency of its profitability and cash flows.
3 Best Choices
We have selected three mutual funds with significant exposure to the utilities sector. The funds carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to gain from the above factors. Moreover, these funds have encouraging three and five-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 the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are 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 Growth Portfolio fund seeks capital appreciation by investing most of its net assets in securities of domestic and foreign companies engaged in the Utility business and earning the majority of their revenues from utility operations. FSUTX advisors use a fundamental approach like financial condition, industry position, as well as market and economic conditions to select investments.
Fidelity Select Utilities Portfolio fund has a history of positive total returns for more than 10 years. Specifically, FSUTX has returned nearly 13.6% and 9.6% over the past three and five-year periods, respectively. Fidelity Select Utilities Portfolio fund has a Zacks Mutual Fund Rank #1 (Strong Buy).
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Telecom and Utilities Fund invests most of its net assets in common stocks of domestic and international telecommunications services and utility companies. The FIUIX advisor chooses to invest in stocks based on fundamental approaches like the issuer’s financial condition, industry position, as well as market and economic conditions to select investments.
Fidelity Telecom and Utilities Fund has a history of positive total returns for more than 10 years. Specifically, FIUIX has returned nearly 11.1% and 7.8% over the past three and five-year periods, respectively. Fidelity Telecom and Utilities Fund has a Zacks Mutual Fund Rank #2 (Buy).
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Advisor Utilities Fund Class A fund aims for capital appreciation. FUGAX invests the lion’s share of assets in common stocks of companies principally engaged in the utilities industry as well as those companies that derive a majority of their revenues from their utility operations.
Fidelity Advisor Utilities Fund Class A fund has a history of positive total returns for more than 10 years. Specifically, FUGAX has returned nearly 13.2% and 9.1% over the past three and five-year periods, respectively. Fidelity Advisor Utilities Fund Class Afund has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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 >>