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3 Fidelity Funds to Make the Most of Solid Retail Sales

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Retail sales registered a stable increase last month, posting its best rise since last November. Upbeat sentiment over consumer spending boosted retail sales and is expected to continue to benefit retailers in the coming months. Stable job growth, better consumer confidence and a positive impact of tax cuts are expected to boost consumer spending and drive retail sales in the near future.

Auto parts, appliances and furniture dealers registered strong sales growth. Grocers, drug stores, and bars and restaurants too moved north. Given this healthy pattern of consumer spending, it will be wise to invest in those mutual funds that are linked to the retail industry.

Consumer Spending Rises in March

The Commerce Department said on Apr 16 that U.S. retail sales moved north in March. Sales at retail stores and restaurants rose 0.6% last month after decreasing 0.1% in February, reporting its best increase since November 2017. Out of the 13 major categories, eight registered improvement in sales for the month of March.

Car sales rose 2% to 101,295 in March, registering the best increase since last September. Car sales at a seasonally adjusted annualized rate (“SAAR”) increased to 17.4 million units in March, the highest so far this year. Health and personal-care stores sales rose 1.4%, registering its best rise in last two years.

Further, the so-called core retail sales figure that excludes automobiles, gasoline, building materials and food services advanced 0.2% in March following a similar 0.2% increase in February.

Steady job additions and a 17-year low unemployment rate are expected to have a positive impact on consumer confidence. Better consumer optimism, which along with the Tax Cuts and Jobs Act of 2017 is expected to boost retail sales in near future.

Why Fidelity Mutual Funds?

Fidelity Investments is considered one of the leaders in the financial services industry with presence in eight countries of North America, Europe, Asia and Australia. The company had total assets of $6.8 trillion, with around $2.4 trillion under management as of Dec 31, 2017.

Fidelity has individual customers of 26 million and manages a large number of mutual funds across a wide range of categories, including both domestic as well as foreign funds, and equity and fixed income funds.

The main reason for choosing mutual funds from Fidelity in this article is because the fund family focuses on dealing in index-based funds or sectoral funds, which will be ideal to pick those Fidelity mutual funds that have significant exposure in the retail industry.

3 Fidelity Fund Picks

Along with strong retail sales numbers in March, companies related to the retail sector are continued to gain even further this month. This is borne out by the fact that the SPDR S&P Retail ETF (XRT) gained 6.3% in the last one year, turning out to be one of the best performing sectors among the key S&P 500 sectors. Additionally, mutual funds related to the broader consumer defensive sector registered strong returns. According to Morningstar, the consumer defensive mutual fund posted returns of 4.9% in the last one-year period.

Against this encouraging backdrop, we have selected three Fidelity mutual funds that boast a Zacks Mutual Zacks Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive 3-year and 5-year annualized returns. They also have minimum initial investment within $5000 and 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.

Fidelity Select Leisure Portfolio (FDLSX - Free Report) invests the majority of its assets in securities of companies engaged in the design, production or distribution of goods or services in the leisure industries. FDLSX comes under the category of consumer cyclical funds.

Further, as of the last filing, McDonald's Corp, Starbucks Corp and Marriott International Inc were the top holdings for FDLSX. This Zacks Rank #1 (Strong Buy) fund was incepted in 1984. FDLSX carries an expense ratio of 0.80% as compared with the category average of 1.34%.

Specifically, the fund’s returns over the three and five-year benchmarks are 10.1% and 13.8%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report)  seeks appreciation of capital. FSCPX normally invests a bulk of its assets in securities of companies principally engaged in the manufacture and distribution of consumer discretionary services and products. The fund invests in both U.S. and non-U.S. companies.

Further, as of the last filing, Amazon.com Inc, The Home Depot Inc and Walt Disney Co were the top holdings for FSCPX. This Zacks Rank #2 (Buy) was incepted in 1990. FSCPX carries an expense ratio of 0.76% as compared with the category average of 1.34%.

Specifically, the fund’s returns over the three and five-year benchmarks are 9.8% and 14%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

Fidelity Select Transportation (FSRFX - Free Report)  seeks capital growth. FSRFX invests the majority of its assets in securities of companies involved in design, manufacture and sale of transportation equipment and provide transportation services. The non-diversified fund invests in both U.S. and non-U.S. companies.

Further, as of the last filing, Union Pacific Corp, United Parcel Service Inc and FedEx Corp were the top holdings for FSRFX. This Zacks Rank #2 (Buy) fund was incepted in 1986. FSRFX carries an expense ratio of 0.83% as compared with the category average of 1.24%.

Specifically, the fund’s returns over the three and five year benchmarks are 8.1% and 15%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

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