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3 Solid Funds to Buy as Retail Sales Make Steady Rebound
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The retail sector is making a solid turnaround after taking a massive hit last year owing to inflationary pressure. According to the Commerce Department, retail sales continued to rise in July, driven by robust consumer demand.
Also, cooling inflation and a steady rise in personal income are aiding retailers. Given this situation, it would be prudent to invest in retail and consumer discretionary funds like Fidelity Select Retailing Portfolio (FSRPX - Free Report) , Fidelity Select Consumer Staples Portfolio (FDFAX - Free Report) and Fidelity Select Consumer Discretionary (FSCPX - Free Report) .
Retail Sales Rebounding
Retail sales rose a solid 0.7% to $696.4 billion in July, surpassing the consensus estimates of 0.4%, the Commerce Department said on Aug 15. This follows a 0.2% rise in June and is the best reading since January 2023.
Excluding autos, retail sales climbed 1% in July, beating analysts’ expectations of a rise of 0.4%. Sales at restaurants and bars rose 1.4%, while sales at sporting goods stores advanced 1.5%.
E-commerce, which has been powering retail sales for quite some time now, once again played a major role as online sales jumped 1.9%.
The solid jump in July comes as inflation continues to decline. Inflation has sharply declined over the past year from its peak of 9.1% in June 2022. The Fed’s aggressive interest rate hikes are finally bearing fruit.
The Fed has increased interest rates by 525 basis points since March 2022, taking the benchmark rate to the range of 5.25-5.5%.
Although inflation is still higher than the Fed’s target rate of 2%, market participants are hopeful that the Fed could soon end its interest rate hike campaign. This definitely bodes well for the retail sector, as lower interest rates will give consumers more purchasing power.
3 Best Choices
We have selected three mutual funds with significant exposure to the retail and discretionary 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 in identifying 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 Retailing Portfolio fund aims for capital appreciation. FSRPX invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.
Fidelity Select Retailing Portfolio fund has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned nearly 5.9% and 9.6% over the past three and five-year periods, respectively. FSRPX 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.
Fidelity Select Consumer Staples Portfolio fund aims for capital growth. FDFAX invests the majority of its assets in securities of companies primarily engaged in manufacturing, marketing or distribution of consumer staples products. Fidelity Select Consumer Staples Portfolio fund invests in both U.S. and non-U.S. issuers.
Fidelity Select Consumer Staples Portfolio has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 11.1% and 9.9% over the past three and five years, respectively. FDFAX 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.
Fidelity Select Consumer Discretionary fund usually invests in large blend companies. The objective of FSCPX is to seek capital appreciation. Fidelity Select Consumer Discretionary fund normally invests at least 80% of its assets in common stocks of companies principally engaged in the manufacture and distribution of goods and services to consumers both domestically and internationally.
Fidelity Select Consumer Discretionary fund has a history of positive total returns for more than 10 years. Specifically, FSCPX has returned nearly 8.4% and nearly 9.6% over the past three and five-year periods, respectively. FSCPX has a Zacks Mutual Fund Rank #1.
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 as Retail Sales Make Steady Rebound
The retail sector is making a solid turnaround after taking a massive hit last year owing to inflationary pressure. According to the Commerce Department, retail sales continued to rise in July, driven by robust consumer demand.
Also, cooling inflation and a steady rise in personal income are aiding retailers. Given this situation, it would be prudent to invest in retail and consumer discretionary funds like Fidelity Select Retailing Portfolio (FSRPX - Free Report) , Fidelity Select Consumer Staples Portfolio (FDFAX - Free Report) and Fidelity Select Consumer Discretionary (FSCPX - Free Report) .
Retail Sales Rebounding
Retail sales rose a solid 0.7% to $696.4 billion in July, surpassing the consensus estimates of 0.4%, the Commerce Department said on Aug 15. This follows a 0.2% rise in June and is the best reading since January 2023.
Excluding autos, retail sales climbed 1% in July, beating analysts’ expectations of a rise of 0.4%. Sales at restaurants and bars rose 1.4%, while sales at sporting goods stores advanced 1.5%.
E-commerce, which has been powering retail sales for quite some time now, once again played a major role as online sales jumped 1.9%.
The solid jump in July comes as inflation continues to decline. Inflation has sharply declined over the past year from its peak of 9.1% in June 2022. The Fed’s aggressive interest rate hikes are finally bearing fruit.
The Fed has increased interest rates by 525 basis points since March 2022, taking the benchmark rate to the range of 5.25-5.5%.
Although inflation is still higher than the Fed’s target rate of 2%, market participants are hopeful that the Fed could soon end its interest rate hike campaign. This definitely bodes well for the retail sector, as lower interest rates will give consumers more purchasing power.
3 Best Choices
We have selected three mutual funds with significant exposure to the retail and discretionary 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 in identifying 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 Retailing Portfolio fund aims for capital appreciation. FSRPX invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.
Fidelity Select Retailing Portfolio fund has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned nearly 5.9% and 9.6% over the past three and five-year periods, respectively. FSRPX 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.
Fidelity Select Consumer Staples Portfolio fund aims for capital growth. FDFAX invests the majority of its assets in securities of companies primarily engaged in manufacturing, marketing or distribution of consumer staples products. Fidelity Select Consumer Staples Portfolio fund invests in both U.S. and non-U.S. issuers.
Fidelity Select Consumer Staples Portfolio has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 11.1% and 9.9% over the past three and five years, respectively. FDFAX 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.
Fidelity Select Consumer Discretionary fund usually invests in large blend companies. The objective of FSCPX is to seek capital appreciation. Fidelity Select Consumer Discretionary fund normally invests at least 80% of its assets in common stocks of companies principally engaged in the manufacture and distribution of goods and services to consumers both domestically and internationally.
Fidelity Select Consumer Discretionary fund has a history of positive total returns for more than 10 years. Specifically, FSCPX has returned nearly 8.4% and nearly 9.6% over the past three and five-year periods, respectively. FSCPX has a Zacks Mutual Fund Rank #1.
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 >>