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2 Solid Mutual Funds to Boost Your Portfolio on Surging Factory Orders
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The U.S. manufacturing sector continues to show signs of a gradual recovery despite persistent inflationary pressures. New orders for factory goods increased in August, supported by solid demand even as elevated prices continued to weigh on businesses.
Oil prices have jumped sharply over the past six months amid the ongoing crisis in the Middle East, pushing up the cost of raw materials. Still, demand for electrical equipment, appliances and related components remained strong in August, helping drive growth in new factory orders.
Given the situation, 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.
Factory Orders Gain
The Commerce Department said last week that factory orders increased 0.1% sequentially in August, following a revised 0.8% rise in July. The increase matched economists’ expectations. On a year-over-year basis, factory orders advanced 6.8% in August.
Growth in August was led largely by stronger demand for electrical equipment and appliances, with orders rising 1.1%. Orders for motor vehicle bodies, parts and trailers also increased 0.8%.
Machinery orders gained 1.1%, while orders for computers and electronic products were unchanged from the previous month. Year over year, however, orders for computers and electronic products surged 14.7% in August.
The rapid buildout of AI infrastructure is also contributing to stronger manufacturing activity. Companies are replenishing inventories to meet sustained domestic demand for factory-made goods.
Orders for non-defense capital goods excluding aircraft, an important measure of planned business spending on equipment, rose a solid 1.6% in August, matching the previous month’s increase. Shipments of core capital goods increased 0.5%.
At the same time, rising oil prices owing to the war between the United States and Iran have created further challenges for manufacturers and other industries. Diesel prices have reached record levels, increasing operating costs for manufacturers. Higher tariffs have also pushed up the cost of goods.
Despite these challenges, continued strength in demand has helped sustain manufacturing activity, providing a positive signal for the sector’s outlook.
2 Best Choices
We have, thus, selected two mutual funds with significant exposure to the manufacturing sector, each carrying a Zacks Mutual Fund Rank #2 (Buy), and 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 fundinvests 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 27.3% and 17.6% over the past three and five years, respectively. The fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.63%, which is lower than the category average.
To see how this fund performed compared to its category, and other #1 (Strong Buy) 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 6.6% and 2.5% over the past three and five years, respectively. Fidelity Select Automotive Portfolio fund has a Zacks Mutual Fund Rank #2 and an expense ratio of 0.78%, which is lower than the category average of 0.93%.
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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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>
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2 Solid Mutual Funds to Boost Your Portfolio on Surging Factory Orders
The U.S. manufacturing sector continues to show signs of a gradual recovery despite persistent inflationary pressures. New orders for factory goods increased in August, supported by solid demand even as elevated prices continued to weigh on businesses.
Oil prices have jumped sharply over the past six months amid the ongoing crisis in the Middle East, pushing up the cost of raw materials. Still, demand for electrical equipment, appliances and related components remained strong in August, helping drive growth in new factory orders.
Given the situation, 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.
Factory Orders Gain
The Commerce Department said last week that factory orders increased 0.1% sequentially in August, following a revised 0.8% rise in July. The increase matched economists’ expectations. On a year-over-year basis, factory orders advanced 6.8% in August.
Growth in August was led largely by stronger demand for electrical equipment and appliances, with orders rising 1.1%. Orders for motor vehicle bodies, parts and trailers also increased 0.8%.
Machinery orders gained 1.1%, while orders for computers and electronic products were unchanged from the previous month. Year over year, however, orders for computers and electronic products surged 14.7% in August.
The rapid buildout of AI infrastructure is also contributing to stronger manufacturing activity. Companies are replenishing inventories to meet sustained domestic demand for factory-made goods.
Orders for non-defense capital goods excluding aircraft, an important measure of planned business spending on equipment, rose a solid 1.6% in August, matching the previous month’s increase. Shipments of core capital goods increased 0.5%.
At the same time, rising oil prices owing to the war between the United States and Iran have created further challenges for manufacturers and other industries. Diesel prices have reached record levels, increasing operating costs for manufacturers. Higher tariffs have also pushed up the cost of goods.
Despite these challenges, continued strength in demand has helped sustain manufacturing activity, providing a positive signal for the sector’s outlook.
2 Best Choices
We have, thus, selected two mutual funds with significant exposure to the manufacturing sector, each carrying a Zacks Mutual Fund Rank #2 (Buy), and 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 fundinvests 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 27.3% and 17.6% over the past three and five years, respectively. The fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.63%, which is lower than the category average.
To see how this fund performed compared to its category, and other #1 (Strong Buy) 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 6.6% and 2.5% over the past three and five years, respectively. Fidelity Select Automotive Portfolio fund has a Zacks Mutual Fund Rank #2 and an expense ratio of 0.78%, which is lower than the category average of 0.93%.
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 >>