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5 Mutual Funds to Buy as U.S. Industrial Production Surges

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Per the latest report from the Federal Reserve, U.S. industrial production increased in April for the third consecutive month. Majority of the gains came from a boost in factory output, which remained flat in March. This made an increase in industrial production all the more noticeable.

Moreover, the Institute of Supply Management’s Semiannual Economic Forecast, which was released earlier this month, gave an upbeat industrial and manufacturing outlook for 2018.  Investors looking to make the most of such an opportunity should bet on mutual funds from the space.

Third Consecutive Month of Gains

Industrial production for the month of April rose 0.7%. This marked the third successive month of gains. The growth was achieved on the back of broad-based improvement across all the sectors. Also, the metric registered a year-over-year increase of 3.5% in April.  

Notably, the output for mining and utilities increased by 1.1% and 1.9%, respectively. Also, manufacturing output increased by 0.5% in April after remaining unchanged in March. Overall, industrial production registered year-over-year growth of 3.5%. Capacity utilization came in at 78%, its highest level in three years.

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 9.3% over the three-year and 11.9% 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 1.23%.

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 2.7% over the three-year and 9% 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 1.17%.

Fidelity Select Defense & Aerospace Portfolio (FSDAX - Free Report) invests a huge 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 17.5% over the three-year and 18.8% 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.

FSDAX has a Zacks Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.23%.

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 9.4% over the three-year and 15.1% 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 1.23%.

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