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According to the latest developments, Republicans from Senate passed the tax overhaul Bill, voting along party lines on Dec 19. The Senate voted 51-48 in favor of the Bill, with all the Republicans present in the Senate supporting the new tax code. The Bill permanently slashes corporate tax rates. Further, there is a significant reduction in taxes for pass through businesses.
Further, a slash in the corporate tax rate would benefit tech-giants, financial behemoths and healthcare companies. Also, Trump’s one-time tax repatriation means that big tech companies hoarding trillions of dollars in cash abroad would benefit greatly. Under such conditions, it would be prudent to invest in healthcare, tech and financial mutual funds.
The Likely Beneficiaries of a Tax Cut
According to the latest proposals, the Republican Tax Bill lowers the corporate tax rate to 21% from 35%. Further, the top individual rate would be capped at 37%. Moreover, the new corporate tax slab would be implemented from next year instead of 2019.
A cut in domestic tax rates would mean that banks and big financial institutions that are weighed down by a hefty tax load would benefit greatly. Banks face a high tax burden, which makes them big gainers when the tax rates go down. As per KBW estimates, JPMorgan Chase & Co. , Wells Fargo & Co. and Bank of America Corp will enjoy a 20% or more hike in profits if the corporate tax rate is cut to 21%.
Moreover, Trump’s one-time tax repatriation policy is likely to improve the overall financial health of tech companies. Such a tax holiday would allow large tech corporations hoarding trillions of dollars held as cash reserve overseas to bring back profits for one-time tax.
Let us not forget that tech behemoths Apple, Alphabet, Microsoft, Cisco Systems, Inc. and Oracle hold 88% of their money overseas to avoid paying the 35% corporate tax rate on earnings. Thus, they are positioned to gain immensely under Trump’s tax reduction plan. Earnings from companies like Hewlett Packard Enterprise Co and QUALCOMM, Inc.’s are also projected to rise around 20.8% and 10.5%, respectively, on a repatriation tax cut, per Strategas Research Partners. (Read More)
Why Invest In Mutual Funds?
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).
5 Hot Choice Mutual Funds
Here, we have highlighted five mutual funds sporting a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one-year and year-to-date returns. Additionally, the minimum initial investment is within $5000 and net assets are above $50 million.
The Senate’s permanent slashing of the corporate tax rate bodes well for financial corporations such as banks which bear the load of hefty domestic tax. Further, Trump’s one-time tax-repatriation policy would enable tech companies hoarding huge cash reserves abroad to bring profits back home at a much cheaper rate. Finally, a reduced rate would leave drug companies with enough cash reserves to engage in mergers and acquisitions.
Under such economic and political conditions, there cannot be a better time to invest in financial, tech and healthcare mutual funds.
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.
Fidelity Select Banking (FSRBX - Free Report) seeks appreciation of capital. FSRBX normally invests at least 80% of assets in common stocks of companies principally involved in banking. The fund invests in both U.S. and non-U.S. companies.
FSRBX has an annual expense ratio of 0.79%, which is below the category average of 1.47%. The fund’s respective returns are 14.1% and 14.7% for the year-to-date and one-year annualized periods. It has a Zacks Mutual Fund Rank #2.
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) invests the majority of its assets in common stocks of companies involved in offering financial services to industries and consumers. FIDSX seeks capital growth for the long run. Before investing in financial companies, the fund measures their industry position and financial condition.
FIDSX has an annual expense ratio of 0.76%, which is below the category average of 1.47%. The fund’s respective returns are 21.5% and 21.3% for the year-to-date and one-year annualized periods. It has a Zacks Mutual Fund Rank #1.
Janus Global Technology T (JAGTX - Free Report) invests the lion’s share of its assets in equity securities of those companies that are expected to gain from improvements or advancements in technology. JAGTX seeks capital appreciation for the long run and invests in both domestic and foreign companies with stable growth potential. It generally invests in companies from different nations including the United States.
JAGTX has an annual expense ratio of 0.94%, which is below the category average of 1.41%. The fund’s respective returns are 46.2% and 44.7% for the year-to-date and one-year annualized periods. It sports a Zacks Mutual Fund Rank #1.
Fidelity Advisor Technology I (FATIX - Free Report) seeks appreciation of capital in the long run. FATIX invests the lion's shares of its assets in common stocks and securities of companies involved in developing and offering products and services which would, in the future, benefit a great deal from technological developments.
FATIX has an annual expense ratio of 0.77%, which is below the category average of 1.42%. The fund has year-to-date and three-year returns of 53.1% and 51.9%, respectively, and carries a Zacks Mutual Fund Rank #1.
Franklin Biotechnology Discovery A (FBDIX - Free Report) invests the lion's share of its assets in securities of companies from the biotechnology domain. The non-diversified fund may invest a maximum of one-fifth of its assets in equities as well as debt securities of U.S. and non-U.S. biotech companies.
FBDIX has an annual expense ratio of 1.02%, which is below the category average of 1.32%. It has year-to-date and one-year returns of 16.5% and 13.7%, respectively. FIDSX has a Zacks Mutual Fund Rank #1
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5 Mutual Funds to Ride the Republican Tax Bill
According to the latest developments, Republicans from Senate passed the tax overhaul Bill, voting along party lines on Dec 19. The Senate voted 51-48 in favor of the Bill, with all the Republicans present in the Senate supporting the new tax code. The Bill permanently slashes corporate tax rates. Further, there is a significant reduction in taxes for pass through businesses.
Further, a slash in the corporate tax rate would benefit tech-giants, financial behemoths and healthcare companies. Also, Trump’s one-time tax repatriation means that big tech companies hoarding trillions of dollars in cash abroad would benefit greatly. Under such conditions, it would be prudent to invest in healthcare, tech and financial mutual funds.
The Likely Beneficiaries of a Tax Cut
According to the latest proposals, the Republican Tax Bill lowers the corporate tax rate to 21% from 35%. Further, the top individual rate would be capped at 37%. Moreover, the new corporate tax slab would be implemented from next year instead of 2019.
A cut in domestic tax rates would mean that banks and big financial institutions that are weighed down by a hefty tax load would benefit greatly. Banks face a high tax burden, which makes them big gainers when the tax rates go down. As per KBW estimates, JPMorgan Chase & Co. , Wells Fargo & Co. and Bank of America Corp will enjoy a 20% or more hike in profits if the corporate tax rate is cut to 21%.
Moreover, Trump’s one-time tax repatriation policy is likely to improve the overall financial health of tech companies. Such a tax holiday would allow large tech corporations hoarding trillions of dollars held as cash reserve overseas to bring back profits for one-time tax.
Let us not forget that tech behemoths Apple, Alphabet, Microsoft, Cisco Systems, Inc. and Oracle hold 88% of their money overseas to avoid paying the 35% corporate tax rate on earnings. Thus, they are positioned to gain immensely under Trump’s tax reduction plan. Earnings from companies like Hewlett Packard Enterprise Co and QUALCOMM, Inc.’s are also projected to rise around 20.8% and 10.5%, respectively, on a repatriation tax cut, per Strategas Research Partners. (Read More)
Why Invest In Mutual Funds?
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).
5 Hot Choice Mutual Funds
Here, we have highlighted five mutual funds sporting a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one-year and year-to-date returns. Additionally, the minimum initial investment is within $5000 and net assets are above $50 million.
The Senate’s permanent slashing of the corporate tax rate bodes well for financial corporations such as banks which bear the load of hefty domestic tax. Further, Trump’s one-time tax-repatriation policy would enable tech companies hoarding huge cash reserves abroad to bring profits back home at a much cheaper rate. Finally, a reduced rate would leave drug companies with enough cash reserves to engage in mergers and acquisitions.
Under such economic and political conditions, there cannot be a better time to invest in financial, tech and healthcare mutual funds.
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.
Fidelity Select Banking (FSRBX - Free Report) seeks appreciation of capital. FSRBX normally invests at least 80% of assets in common stocks of companies principally involved in banking. The fund invests in both U.S. and non-U.S. companies.
FSRBX has an annual expense ratio of 0.79%, which is below the category average of 1.47%. The fund’s respective returns are 14.1% and 14.7% for the year-to-date and one-year annualized periods. It has a Zacks Mutual Fund Rank #2.
Fidelity Select Financial Services Portfolio (FIDSX - Free Report) invests the majority of its assets in common stocks of companies involved in offering financial services to industries and consumers. FIDSX seeks capital growth for the long run. Before investing in financial companies, the fund measures their industry position and financial condition.
FIDSX has an annual expense ratio of 0.76%, which is below the category average of 1.47%. The fund’s respective returns are 21.5% and 21.3% for the year-to-date and one-year annualized periods. It has a Zacks Mutual Fund Rank #1.
Janus Global Technology T (JAGTX - Free Report) invests the lion’s share of its assets in equity securities of those companies that are expected to gain from improvements or advancements in technology. JAGTX seeks capital appreciation for the long run and invests in both domestic and foreign companies with stable growth potential. It generally invests in companies from different nations including the United States.
JAGTX has an annual expense ratio of 0.94%, which is below the category average of 1.41%. The fund’s respective returns are 46.2% and 44.7% for the year-to-date and one-year annualized periods. It sports a Zacks Mutual Fund Rank #1.
Fidelity Advisor Technology I (FATIX - Free Report) seeks appreciation of capital in the long run. FATIX invests the lion's shares of its assets in common stocks and securities of companies involved in developing and offering products and services which would, in the future, benefit a great deal from technological developments.
FATIX has an annual expense ratio of 0.77%, which is below the category average of 1.42%. The fund has year-to-date and three-year returns of 53.1% and 51.9%, respectively, and carries a Zacks Mutual Fund Rank #1.
Franklin Biotechnology Discovery A (FBDIX - Free Report) invests the lion's share of its assets in securities of companies from the biotechnology domain. The non-diversified fund may invest a maximum of one-fifth of its assets in equities as well as debt securities of U.S. and non-U.S. biotech companies.
FBDIX has an annual expense ratio of 1.02%, which is below the category average of 1.32%. It has year-to-date and one-year returns of 16.5% and 13.7%, respectively. FIDSX has a Zacks Mutual Fund Rank #1
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 >>