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2 Mutual Funds to Buy on a Solid Jump in Industrial Production
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The struggle for the U.S. manufacturing sector appears to be over. The sector is finally showing signs of recovery this year. Although rising inflation, elevated oil prices, and higher tariffs continue to create pressure, strong demand for goods has been supporting the industry’s comeback. Recent gains in manufacturing activity and industrial production indicate that the sector could see steady growth in the coming months.
Against this improving backdrop, investors may want to consider funds like Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) and Fidelity Select Automotive Portfolio (FSAVX - Free Report) that are likely to benefit in the near term.
Manufacturing Activity Gathers Stream
Latest data from the Federal Reserve shows that U.S. industrial production climbed 0.6% in April from the previous month, beating analysts’ expectations of a 0.2% increase and marking the biggest monthly rise since February 2025. March’s figure was also revised higher to a 0.1% gain. Compared with a year earlier, industrial production increased 1.3% in April.
A major driver of the increase was motor vehicles and parts production, which surged 3.7% during the month. Strong consumer demand for technology products, including computers and peripherals, also boosted factory output. Output in high-tech industries rose 1% in April after gaining 0.5% in March, while durable goods production advanced 1.2%.
The Federal Reserve’s report comes days after the release of the ISM Manufacturing Index, which showed the PMI climbing to 52.7 in April. Manufacturing currently represents about 9.4% of the U.S. economy. Investment tied to artificial intelligence continues to expand rapidly as more businesses adopt AI technologies, further supporting the sector.
Production of semiconductors and related electronic components increased 1%, while communications equipment output rose 0.6%. Even though inflation pressures linked to the Iran conflict and tariff-related concerns remain challenges for the broader economy, strong demand and continued AI-related spending are helping keep the manufacturing sector on a solid footing.
2 Best Choices
We have, thus, selected two mutual funds with significant exposure to the manufacturing sector, each carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
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).
Fidelity Select Defense & Aerospace Portfolio fund invests a huge portion of its assets in the securities of companies involved primarily in the research, manufacturing, and sale of products and services in the defense or aerospace industries. FSDAX seeks capital growth by investing in both U.S. and non-U.S. companies.
Fidelity Select Defense & Aerospace Portfolio fund has a history of positive total returns for over 10 years. FSDAX has returned 26.3% and 15.9% over the past three and five years, respectively, and has a Zacks Mutual Fund Rank #2. The fund has an annual expense ratio of 0.64%, which is lower than the category average.
To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Automotive Portfolio fund aims for capital appreciation. FSAVX invests most of its assets in common stocks of companies engaged in manufacturing automobiles, trucks, specialty vehicles, parts, tires and related services.
Fidelity Select Automotive Portfolio fund has a history of positive total returns for over 10 years. FSAVX has returned 13.1% and 3.5% over the past three and five years, respectively. The fund has a Zacks Mutual Fund Rank #2 and an expense ratio of 0.79%, which is lower than the category average of 0.92%.
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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2 Mutual Funds to Buy on a Solid Jump in Industrial Production
The struggle for the U.S. manufacturing sector appears to be over. The sector is finally showing signs of recovery this year. Although rising inflation, elevated oil prices, and higher tariffs continue to create pressure, strong demand for goods has been supporting the industry’s comeback. Recent gains in manufacturing activity and industrial production indicate that the sector could see steady growth in the coming months.
Against this improving backdrop, investors may want to consider funds like Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) and Fidelity Select Automotive Portfolio (FSAVX - Free Report) that are likely to benefit in the near term.
Manufacturing Activity Gathers Stream
Latest data from the Federal Reserve shows that U.S. industrial production climbed 0.6% in April from the previous month, beating analysts’ expectations of a 0.2% increase and marking the biggest monthly rise since February 2025. March’s figure was also revised higher to a 0.1% gain. Compared with a year earlier, industrial production increased 1.3% in April.
A major driver of the increase was motor vehicles and parts production, which surged 3.7% during the month. Strong consumer demand for technology products, including computers and peripherals, also boosted factory output. Output in high-tech industries rose 1% in April after gaining 0.5% in March, while durable goods production advanced 1.2%.
The Federal Reserve’s report comes days after the release of the ISM Manufacturing Index, which showed the PMI climbing to 52.7 in April. Manufacturing currently represents about 9.4% of the U.S. economy. Investment tied to artificial intelligence continues to expand rapidly as more businesses adopt AI technologies, further supporting the sector.
Production of semiconductors and related electronic components increased 1%, while communications equipment output rose 0.6%. Even though inflation pressures linked to the Iran conflict and tariff-related concerns remain challenges for the broader economy, strong demand and continued AI-related spending are helping keep the manufacturing sector on a solid footing.
2 Best Choices
We have, thus, selected two mutual funds with significant exposure to the manufacturing sector, each carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
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).
Fidelity Select Defense & Aerospace Portfolio fund invests a huge portion of its assets in the securities of companies involved primarily in the research, manufacturing, and sale of products and services in the defense or aerospace industries. FSDAX seeks capital growth by investing in both U.S. and non-U.S. companies.
Fidelity Select Defense & Aerospace Portfolio fund has a history of positive total returns for over 10 years. FSDAX has returned 26.3% and 15.9% over the past three and five years, respectively, and has a Zacks Mutual Fund Rank #2. The fund has an annual expense ratio of 0.64%, which is lower than the category average.
To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Automotive Portfolio fund aims for capital appreciation. FSAVX invests most of its assets in common stocks of companies engaged in manufacturing automobiles, trucks, specialty vehicles, parts, tires and related services.
Fidelity Select Automotive Portfolio fund has a history of positive total returns for over 10 years. FSAVX has returned 13.1% and 3.5% over the past three and five years, respectively. The fund has a Zacks Mutual Fund Rank #2 and an expense ratio of 0.79%, which is lower than the category average of 0.92%.
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 >