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Buy 3 Financial Mutual Funds Benefit From Fed's Rate Outlook
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The Federal Reserve, in its June meeting, maintained the federal funds rate at 3.50-3.75% and upped its projected year-end interest rate to 3.6-4.1% for 2026. The central bank described the economy as expanding at a solid rate with “robust” capital spending and productivity growth and noted that inflation remained above its 2% target.
Elevated interest rates are good for the financial services sector, such as banks and other financial companies. These companies make more money from their loans and other interest-bearing assets in a higher interest rate environment.
Looking at the economy as a whole, a strong labor market and healthy business investment will translate into strong demand for loans and other financial products and services, such as those offered by banks and other depositories. Given these conditions, financial services mutual funds may be worth considering as long as interest rates remain elevated.
We have chosen three financial mutual funds, Fidelity Select Banking (FSRBX - Free Report) , JHancock Regional Bank (FRBAX - Free Report) and Davis Financial (RPFGX - Free Report) , which investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Fidelity Select Banking fund invests most of its assets in securities of companies principally engaged in banking, including national and regional banks involved in retail banking and corporate lending, and banks offering a diverse range of financial services.
Gerard Benson has been the lead manager of FSRBX since Feb. 25, 2026. Most of the fund’s holdings were in companies like Wells Fargo & Co (7.9%), Bank of America Corp (7.3%) and Truist Financial Corp (5.7%) as of Feb. 28, 2026.
FSRBX’s 3-year and 5-year annualized returns are 30.3% and 9.1%, respectively. Its net expense ratio is 0.69%. FSRBX 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.
JHancock Regional Bank fund invests most of its assets in equity securities of U.S.-based regional banks and normally invests more than 25% in these companies, making it concentrated in the banking industry. FRBAX advisors use fundamental financial analysis to identify securities that appear comparatively undervalued and may invest in companies positioned for a merger.
Susan Curry has been the lead manager of FRBAX since May 1, 2006. Most of the fund’s holdings were in companies like Pinnacle Financial Partners, Inc. (3.2%), M&T Bank Corp (3.1%), and Citizens Financial Group, Inc. (3%) as of Jan. 31, 2026.
FRBAX’s 3-year and 5-year annualized returns are 26.3% and 5.3%, respectively. Its net expense ratio is 1.20%. FRBAX has a Zacks Mutual Fund Rank #1.
Davis Financial fund invests most of its net assets, plus any borrowings for investment purposes, in securities of companies principally engaged in the financial services sector.
Christopher Cullom Davis has been the lead manager of RPFGX since Jan. 1, 2014. Most of the fund’s holdings were in companies like Capital One Financial Corp (12%), Wells Fargo & Co (9.6%) and JPMorgan Chase & Co. (7.7%) as of Dec. 31, 2025.
RPFGX’s 3-year and 5-year annualized returns are 24.5% and 10.7%, respectively. Its net expense ratio is 0.94%. RPFGX has a Zacks Mutual Fund Rank #1.
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Buy 3 Financial Mutual Funds Benefit From Fed's Rate Outlook
The Federal Reserve, in its June meeting, maintained the federal funds rate at 3.50-3.75% and upped its projected year-end interest rate to 3.6-4.1% for 2026. The central bank described the economy as expanding at a solid rate with “robust” capital spending and productivity growth and noted that inflation remained above its 2% target.
Elevated interest rates are good for the financial services sector, such as banks and other financial companies. These companies make more money from their loans and other interest-bearing assets in a higher interest rate environment.
Looking at the economy as a whole, a strong labor market and healthy business investment will translate into strong demand for loans and other financial products and services, such as those offered by banks and other depositories. Given these conditions, financial services mutual funds may be worth considering as long as interest rates remain elevated.
We have chosen three financial mutual funds, Fidelity Select Banking (FSRBX - Free Report) , JHancock Regional Bank (FRBAX - Free Report) and Davis Financial (RPFGX - Free Report) , which investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Fidelity Select Banking fund invests most of its assets in securities of companies principally engaged in banking, including national and regional banks involved in retail banking and corporate lending, and banks offering a diverse range of financial services.
Gerard Benson has been the lead manager of FSRBX since Feb. 25, 2026. Most of the fund’s holdings were in companies like Wells Fargo & Co (7.9%), Bank of America Corp (7.3%) and Truist Financial Corp (5.7%) as of Feb. 28, 2026.
FSRBX’s 3-year and 5-year annualized returns are 30.3% and 9.1%, respectively. Its net expense ratio is 0.69%. FSRBX 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.
JHancock Regional Bank fund invests most of its assets in equity securities of U.S.-based regional banks and normally invests more than 25% in these companies, making it concentrated in the banking industry. FRBAX advisors use fundamental financial analysis to identify securities that appear comparatively undervalued and may invest in companies positioned for a merger.
Susan Curry has been the lead manager of FRBAX since May 1, 2006. Most of the fund’s holdings were in companies like Pinnacle Financial Partners, Inc. (3.2%), M&T Bank Corp (3.1%), and Citizens Financial Group, Inc. (3%) as of Jan. 31, 2026.
FRBAX’s 3-year and 5-year annualized returns are 26.3% and 5.3%, respectively. Its net expense ratio is 1.20%. FRBAX has a Zacks Mutual Fund Rank #1.
Davis Financial fund invests most of its net assets, plus any borrowings for investment purposes, in securities of companies principally engaged in the financial services sector.
Christopher Cullom Davis has been the lead manager of RPFGX since Jan. 1, 2014. Most of the fund’s holdings were in companies like Capital One Financial Corp (12%), Wells Fargo & Co (9.6%) and JPMorgan Chase & Co. (7.7%) as of Dec. 31, 2025.
RPFGX’s 3-year and 5-year annualized returns are 24.5% and 10.7%, respectively. Its net expense ratio is 0.94%. RPFGX 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 >>