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3 Top Mutual Funds Set to Gain From Strong Consumer Spending
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The consumer price index for the month of April rose to 4.9% annually, which is 0.4% higher mostly due to the rise in prices of shelter, used vehicles, and gas. Though the Federal Reserve’s aggressive rate hike has pushed the inflation in a downward trajectory, it is still two times higher than the Fed’s expectation.
Consumers’ willingness to spend, however, is not much affected though the cost of goods and services is still elevated. According to the U.S. Bureau of Economic Analysis, the consumer spending index, which reflects the value of the goods and services purchased by U.S. residents, is recorded at 0.8% for the month of April as compared to 0.1% in March.
The U.S. labor market remains resilient as payroll employment added more than 3 hundred thousand jobs in May. Personal income, as well as disposable personal income, increased by 0.4% in the same period. Thus, with more jobs at hand and Americans having more money to spend, consumer discretionary companies, retailers, and homebuilders are poised to benefit.
Therefore, it is prudent to invest in mutual funds that invest primarily in such companies and seek capital appreciation.
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) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio compared to the category average.
Fidelity Select Construction and Housing Portfolio (FSHOX - Free Report) seeks to achieve its objective by investing the maximum portion of its net assets in securities of domestic and foreign companies that are principally engaged in the design and construction of residential, commercial, industrial, and public works facilities, as well as companies engaged in the manufacture, supply, distribution, or sale of construction and housing products or services. FSCPX advisors make investment decisions after considering companies’ fundamental factors as well as industry positions.
Jordan Michaels has been the lead manager of FSHOX since Sep 7, 2021, and most of the fund’s exposure is in companies like Home Depot (16.8%), Lowe’s Companies (15.4%) and Johnson Controls (5.8%) as of 2/28/2023.
FSHOX’s three-year and five-year annualized returns are 18.7% and 14.9%, respectively. FSHOX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76% compared to the category average of 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests most of its assets in securities of domestic and foreign companies that are principally engaged in the design, production, or distribution of goods or services related to leisure industries. FDLSXadvisors choose to invest based on fundamental factors like financial condition, industry position of the company as well as market and economic conditions.
Kevin Francfort has been the lead manager of FDLSX since Sep 8, 2022, and most of the fund’s exposure is in companies like Mcdonald’s (16.8%), Booking Holdings (11.5%) and Hilton Worldwide (7.9%) as of 2/28/2023.
FDLSX’s three-year and five-year annualized returns are 17.3% and 10.0%, respectively. FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is less than the category average of 0.79%.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) invests most of its net assets in securities of domestic and foreign companies that are engaged in finished goods, merchandise, and services mostly for individual consumers. FSRPX advisors consider fundamental analysis factors of the company as well as the industry to select investment.
Boris Shepov has been the lead manager of FSRPX since May 16, 2018. Most of the fund’s exposure is in companies like Amazon.com (23.8%), Home Depot (11.6%) and Lowe’s Companies (7.6%) as of 2/28/2023.
FSRPX’s three-year and five-year annualized returns are nearly 9.8% and 9.6%, respectively. FSRPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.72%, which is less than the category average of 0.79%.
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3 Top Mutual Funds Set to Gain From Strong Consumer Spending
The consumer price index for the month of April rose to 4.9% annually, which is 0.4% higher mostly due to the rise in prices of shelter, used vehicles, and gas. Though the Federal Reserve’s aggressive rate hike has pushed the inflation in a downward trajectory, it is still two times higher than the Fed’s expectation.
Consumers’ willingness to spend, however, is not much affected though the cost of goods and services is still elevated. According to the U.S. Bureau of Economic Analysis, the consumer spending index, which reflects the value of the goods and services purchased by U.S. residents, is recorded at 0.8% for the month of April as compared to 0.1% in March.
The U.S. labor market remains resilient as payroll employment added more than 3 hundred thousand jobs in May. Personal income, as well as disposable personal income, increased by 0.4% in the same period. Thus, with more jobs at hand and Americans having more money to spend, consumer discretionary companies, retailers, and homebuilders are poised to benefit.
Therefore, it is 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) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio compared to the category average.
Fidelity Select Construction and Housing Portfolio (FSHOX - Free Report) seeks to achieve its objective by investing the maximum portion of its net assets in securities of domestic and foreign companies that are principally engaged in the design and construction of residential, commercial, industrial, and public works facilities, as well as companies engaged in the manufacture, supply, distribution, or sale of construction and housing products or services. FSCPX advisors make investment decisions after considering companies’ fundamental factors as well as industry positions.
Jordan Michaels has been the lead manager of FSHOX since Sep 7, 2021, and most of the fund’s exposure is in companies like Home Depot (16.8%), Lowe’s Companies (15.4%) and Johnson Controls (5.8%) as of 2/28/2023.
FSHOX’s three-year and five-year annualized returns are 18.7% and 14.9%, respectively. FSHOX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76% compared to the category average of 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests most of its assets in securities of domestic and foreign companies that are principally engaged in the design, production, or distribution of goods or services related to leisure industries. FDLSXadvisors choose to invest based on fundamental factors like financial condition, industry position of the company as well as market and economic conditions.
Kevin Francfort has been the lead manager of FDLSX since Sep 8, 2022, and most of the fund’s exposure is in companies like Mcdonald’s (16.8%), Booking Holdings (11.5%) and Hilton Worldwide (7.9%) as of 2/28/2023.
FDLSX’s three-year and five-year annualized returns are 17.3% and 10.0%, respectively. FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is less than the category average of 0.79%.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) invests most of its net assets in securities of domestic and foreign companies that are engaged in finished goods, merchandise, and services mostly for individual consumers. FSRPX advisors consider fundamental analysis factors of the company as well as the industry to select investment.
Boris Shepov has been the lead manager of FSRPX since May 16, 2018. Most of the fund’s exposure is in companies like Amazon.com (23.8%), Home Depot (11.6%) and Lowe’s Companies (7.6%) as of 2/28/2023.
FSRPX’s three-year and five-year annualized returns are nearly 9.8% and 9.6%, respectively. FSRPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.72%, which is less than 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 >>