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The U.S. economy experienced strong jobs growth for the second consecutive month in November. Also, the unemployment rate declined, reflecting tighter labor market conditions. The jobless rate reached its lowest settlement in more than nine years.
Healthcare companies, professional and business services, and construction companies led the way for job creation. Keeping this in mind, we have selected mutual funds that have sufficient exposure to these sectors and are likely to be wise investment choices.
Nonfarm Payrolls Post Gains for Second-Straight Month
According to the U.S. Bureau of Labor Statistics, domestic non-farm payrolls increased by 178,000 last month, which was in line with our consensus estimate. This was also much better than October’s downward revised figure of 142,000 job additions. Moreover, unemployment rate declined from 4.9% in October to 4.6% in November. However, the labor participation rate fell from 62.8% in October to 62.7%.
Also, average hourly earnings fell from $25.92 in October to $25.89 in November, registering its first decline since Dec 2014. Further, some key sectors like manufacturing and retail shed 4,000 and 8,300 jobs, respectively. However, healthcare, professional and business services, and the construction industry posted strong job additions.
Sectors That Led to Job Gains
Healthcare
Employment in the healthcare sector increased by 28,000 last month. Around 407,000 jobs were created by the sector over the last 12 months. Ambulatory health care services created more than 22,000 jobs, pushing up the sector’s job addition.Further, the Health CareSelect Sector SPDR (XLV) increased 2.7% in the last one month.
Professional and Business Services
Employment for the sector advanced by 63,000 last month and by 571,000 in the last 12 months. Bookkeeping and accounting services created 18,000 jobs, while administrative and support services added more than 36,000 jobs. A strong rise in professional and business services helped the industry see gains in nonfarm payrolls for November.
Construction Services
Construction employment increased by 19,000 last month, following strong job growth in residential specialty trade contractors. This particular sector created around 59,000 jobs in the last three months. The major contributor to this gain is employment in the residential construction industry.
Also, Trump is in favor of increasing public spending on infrastructure by a trillion dollars over the next 10 years. In fact, he is expected to offer $137 billion in tax credits to private construction companies undertaking infrastructure projects. Trump’s spending proposals are likely to have a positive impact on this industry.
Buy These 6 Sectoral Mutual Funds
Here we have selected two mutual funds from each of the three sectors that have a Zacks Mutual Fund Rank #1 (Strong Buy).These funds have encouraging three-year returns and minimum initial investment within $5000. Also, these funds have low expense ratios.
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 of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Healthcare
Fidelity Select Medical Delivery Portfolio (FSHCX - Free Report) invests a bulk of its assets in companies that either own or are involved in operating hospital and nursing homes, and are related to the healthcare services sector. This fund has 3-year return of 11.7%. It has an expense ratio of 0.77% as compared to the category average of 1.35%.
Live Oak Health Sciences Fund (LOGSX - Free Report) invests a large portion of its assets in equity securities of health companies that are involved in the research, development, and distribution of services and products related to health care, medicine, or the life sciences. This fund has 3-year return of 8.8%. It has an expense ratio of 1.08% as compared to the category average of 1.35%.
Professional and Business Services
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) invests the majority of its assets in common stocks of companies involved in offering financial and accounting services to industry and consumers. This fund has 3-year return of 7.9%. It has an expense ratio of 0.75% as compared to the category average of 1.59%.
Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) invests more than 80% of its assets in companies whose primary operations are related to software or information-based services. This fund has 3-year return of 7.9%. It has an expense ratio of 0.76% as compared to the category average of 1.48%.
Construction Services
Fidelity Select Industrials (FCYIX - Free Report) invests the huge portion of its assets in securities of companies involved in manufacture, development, sales and distribution of industrial products and equipments. This fund has 3-year return of 7.7%. It has an expense ratio of 0.76% as compared to the category average of 1.27%.
Fidelity Select Industrial Equipment Portfolio invests the lion’s share of its assets in the companies which are engaged in construction and distribution of industrial equipments. This fund has 3-year return of 7.2%. It has an expense ratio of 0.82% as compared to the category average of 1.27%.
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Buy 6 Mutual Funds on Continued Job Growth
The U.S. economy experienced strong jobs growth for the second consecutive month in November. Also, the unemployment rate declined, reflecting tighter labor market conditions. The jobless rate reached its lowest settlement in more than nine years.
Healthcare companies, professional and business services, and construction companies led the way for job creation. Keeping this in mind, we have selected mutual funds that have sufficient exposure to these sectors and are likely to be wise investment choices.
Nonfarm Payrolls Post Gains for Second-Straight Month
According to the U.S. Bureau of Labor Statistics, domestic non-farm payrolls increased by 178,000 last month, which was in line with our consensus estimate. This was also much better than October’s downward revised figure of 142,000 job additions. Moreover, unemployment rate declined from 4.9% in October to 4.6% in November. However, the labor participation rate fell from 62.8% in October to 62.7%.
Also, average hourly earnings fell from $25.92 in October to $25.89 in November, registering its first decline since Dec 2014. Further, some key sectors like manufacturing and retail shed 4,000 and 8,300 jobs, respectively. However, healthcare, professional and business services, and the construction industry posted strong job additions.
Sectors That Led to Job Gains
Healthcare
Employment in the healthcare sector increased by 28,000 last month. Around 407,000 jobs were created by the sector over the last 12 months. Ambulatory health care services created more than 22,000 jobs, pushing up the sector’s job addition.Further, the Health CareSelect Sector SPDR (XLV) increased 2.7% in the last one month.
Professional and Business Services
Employment for the sector advanced by 63,000 last month and by 571,000 in the last 12 months. Bookkeeping and accounting services created 18,000 jobs, while administrative and support services added more than 36,000 jobs. A strong rise in professional and business services helped the industry see gains in nonfarm payrolls for November.
Construction Services
Construction employment increased by 19,000 last month, following strong job growth in residential specialty trade contractors. This particular sector created around 59,000 jobs in the last three months. The major contributor to this gain is employment in the residential construction industry.
Also, Trump is in favor of increasing public spending on infrastructure by a trillion dollars over the next 10 years. In fact, he is expected to offer $137 billion in tax credits to private construction companies undertaking infrastructure projects. Trump’s spending proposals are likely to have a positive impact on this industry.
Buy These 6 Sectoral Mutual Funds
Here we have selected two mutual funds from each of the three sectors that have a Zacks Mutual Fund Rank #1 (Strong Buy).These funds have encouraging three-year returns and minimum initial investment within $5000. Also, these funds have low expense ratios.
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 of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Healthcare
Fidelity Select Medical Delivery Portfolio (FSHCX - Free Report) invests a bulk of its assets in companies that either own or are involved in operating hospital and nursing homes, and are related to the healthcare services sector. This fund has 3-year return of 11.7%. It has an expense ratio of 0.77% as compared to the category average of 1.35%.
Live Oak Health Sciences Fund (LOGSX - Free Report) invests a large portion of its assets in equity securities of health companies that are involved in the research, development, and distribution of services and products related to health care, medicine, or the life sciences. This fund has 3-year return of 8.8%. It has an expense ratio of 1.08% as compared to the category average of 1.35%.
Professional and Business Services
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) invests the majority of its assets in common stocks of companies involved in offering financial and accounting services to industry and consumers. This fund has 3-year return of 7.9%. It has an expense ratio of 0.75% as compared to the category average of 1.59%.
Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) invests more than 80% of its assets in companies whose primary operations are related to software or information-based services. This fund has 3-year return of 7.9%. It has an expense ratio of 0.76% as compared to the category average of 1.48%.
Construction Services
Fidelity Select Industrials (FCYIX - Free Report) invests the huge portion of its assets in securities of companies involved in manufacture, development, sales and distribution of industrial products and equipments. This fund has 3-year return of 7.7%. It has an expense ratio of 0.76% as compared to the category average of 1.27%.
Fidelity Select Industrial Equipment Portfolio invests the lion’s share of its assets in the companies which are engaged in construction and distribution of industrial equipments. This fund has 3-year return of 7.2%. It has an expense ratio of 0.82% as compared to the category average of 1.27%.
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 >>