Back to top

4 Funds to Buy on Sturdy Factory Orders in March

Read MoreHide Full Article

Per the latest report from the Commerce Department, U.S. factory orders increased 1.6% in March. This marked its seventh rise in the past eight months. Such developments are indicative of a burgeoning U.S. manufacturing sector. The sector witnessed increase in capital spending following recent events such as the new tax code, deregulatory measures, and strong demand both in the domestic and global markets.

Worldwide demand for manufacturing products is also growing. Under such broadly encouraging conditions, investing in mutual funds from the industrial sector seems prudent.

Factory Orders Remained Robust in March

On May 3, the Commerce Department stated that U.S. factory orders for March rose to $507.7 billion. The metric surpassed the consensus estimate of 1.3% growth. Further, new orders for manufactured goods also increased 2.6% to $255.2 billion in March. This marked its fourth increase in the past five months.

Shipments of manufactured goods inched up 0.4% to $250.4 billion, rising for the 10th month in the last 11. Also, orders for transportation equipment rose 1.8% to $83.5 billion, providing a major boost to the overall growth. This marked its fourth such increase of transportation in the last five months. Moreover, orders for mining, oil field and gas field machinery increased more than 2.6% in the period.

Meanwhile, the ISM Manufacturing Index came in at 59.3%; with 17 of the 18 industries that were surveyed reported growth.

4 Best Funds to Buy Now

Given such positives, we have highlighted four industrial mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.

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.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Industrials Fund (FCYIX - Free Report) seeks capital appreciation. FCYIX normally invests a large portion of its assets in common stocks of companies principally engaged in the research, development, manufacture, distribution, supply, or sale of materials, equipment, products, or services related to cyclical industries.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 9.6% over the three-year and 12% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FCYIX has a Zacks Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.29%.

Fidelity Select Automotive Port (FSAVX - Free Report) seeks capital appreciation. This fund invests the majority of its assets in common stocks of companies involved in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires and related services.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 2.5% over the three-year and 9.8% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FSAVX has a Zacks Rank #2 and an annual expense ratio of 0.96%, which is below the category average of 1.35%.

Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) invests a big portion of its assets in securities of companies involved primarily in the research, manufacture and sale of products and services as per the defense or aerospace industries. The fund seeks capital growth by investing in both U.S. and non-U.S. companies.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.4% over the three-year and 12% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FSDAX has a Zacks Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.29%.

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.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 8.1% over the three-year and 15% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FSRFX has a Zacks Rank #2 and an annual expense ratio of 0.80%, which is below the category average of 1.29%.

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 >>



More from Zacks Mutual Fund Commentary

You May Like