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Initial Claims Lowest Since 1969: 5 Service-Based Funds to Buy
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U.S. Labor Department’s weekly initial claims data for the week ended Jul 19, reached its lowest level since December 1969. Moreover, jobless claims have been consistently coming in lower than 300,000. This in turn gave fresh evidence that the labor market is in good shape. Additionally, the labor market remained firm supported by strong job additions and record-low unemployment level.
Strong non-farm payrolls data for June along with recent decline in weekly jobless claims indicated that employers will continue to expand their payroll. Following these developments, the service-related sectors look quite attractive. Thus, investing in mutual funds having significant exposure to services-related companies seems prudent at this point.
Jobless Claims Continue to Slip
Last week, the U.S. Labor Department data revealed that weekly jobless claims decreased 8,000 to a seasonally adjusted 207,000 for the week ended Jul 19. This was lower than the consensus estimate of 221,000 and was the lowest level since Dec 6, 1969.
Steady job additions and low unemployment rate contributed to this record low initial claims. Also, the four-week moving average of initial claims dropped 2,750 to 220,500 for the week ended Jul 14. This metric is considered a better measure of labor market trends as it eliminates weekly fluctuations. (Read More: Weekly Jobless Claims Plunge to 48-Year Low: 5 Top Picks)
June’s Job Additions Beat Estimate
Domestic non-farm payrolls came in at 213,000 in June, significantly higher than the consensus estimate of 196,000, per the United States Bureau of Labor Statistics (BLS). Moreover, the BLS reported that April's job numbers were revised up by 16,000 to 175,000, while May's figure was upwardly revised by 21,000 to 244,000.
Meanwhile, average hourly earnings rose by 0.2% or 5 cents to $26.98 in June, lower than the consensus estimate and May’s figure of an increase of 0.3%. Further, the unemployment rate rose by 0.2% to 4% in June.
However, the unemployment rate increased slightly, because the labor force participation rate in June was 62.9%, reflecting a 0.2% increase from the prior month. Improvement in employment and gradual wage growth, with older workers retiring and leaving the labor force boosted the job participation rate. (Read More: U.S. Job Additions Exceed Expectations: 4 Fund Picks)
Buy These 5 Buy-Ranked Mutual Funds
The latest jobless claims data bodes well for the service-focused industry. Following these developments, investors may consider investing in service sector-related mutual funds. We have selected five mutual funds that flaunt a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one-year 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 Construction & Housing Portfolio (FSHOX - Free Report) invests a major portion of its assets in securities of companies involved in construction and design of commercial, residential and industrial facilities. FSHOX invests mainly in common stocks of both U.S. and non-U.S. companies.
FSHOX carries an expense ratio of 0.80% compared with the category average of 1.23%. Moreover, FSHOX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 10.7%.
FSHOX has a Zacks Mutual Fund Rank #2. Further, Neil Nabar is the fund manager of FSHOX since 2016.
T. Rowe Price Financial Services (PRISX - Free Report) seeks both capital growth and current income. The majority of its assets are invested in financial services sector companies. It may also purchase securities of companies involved in providing financial software. The fund uses fundamental bottom-up analysis in order to select securities.
PRISX carries an expense ratio of 0.85% compared with the category average of 1.41%. Moreover, PRISX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 13.3%.
PRISX has a Zacks Mutual Fund Rank #1. Further, Gabriel Solomon is the fund manager of PRISX since 2014.
Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) invests the majority of its assets in companies whose primary operations are related to software or information-based services. FSCSX primarily focuses on acquiring common stocks of both domestic and foreign companies. The fund uses fundamental analysis to select companies for investment purposes.
FSCSX carries an expense ratio of 0.73% compared with the category average of 1.41%. Moreover, FSCSX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 29.1%.
The fund sports a Zacks Mutual Fund Rank #2. Moreover, Ali Khan is the fund manager of FSCSX since 2014.
Prudential Jennison Financial Services A (PFSAX - Free Report) invests a huge portion of its assets in equity securities of companies that provide financial services. PFSAX may invest around 30% of its assets in non-U.S. companies.
PFSAX carries an expense ratio of 1.34% compared with the category average of 1.41%. Moreover, PFSAX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 11.6%.
PFSAX has a Zacks Mutual Fund Rank #2. Further, Steven A. Gavios is a fund manager of PFSAX since 2017.
Fidelity Select Health Care Services Portfolio (FSHCX - Free Report) invests a big part of its assets in companies that either own or are involved in operating hospital and nursing homes and are related to the healthcare services sector. The fund invests in securities of both U.S. and non-U.S. companies.
FSHCX carries an expense ratio of 0.77% compared with the category average of 1.35%. Moreover, FSHCX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 14.9%.
The fund has a Zacks Mutual Fund Rank #1. Moreover, Justin Segalini is the fund manager of FSHCX since 2016.
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Initial Claims Lowest Since 1969: 5 Service-Based Funds to Buy
U.S. Labor Department’s weekly initial claims data for the week ended Jul 19, reached its lowest level since December 1969. Moreover, jobless claims have been consistently coming in lower than 300,000. This in turn gave fresh evidence that the labor market is in good shape. Additionally, the labor market remained firm supported by strong job additions and record-low unemployment level.
Strong non-farm payrolls data for June along with recent decline in weekly jobless claims indicated that employers will continue to expand their payroll. Following these developments, the service-related sectors look quite attractive. Thus, investing in mutual funds having significant exposure to services-related companies seems prudent at this point.
Jobless Claims Continue to Slip
Last week, the U.S. Labor Department data revealed that weekly jobless claims decreased 8,000 to a seasonally adjusted 207,000 for the week ended Jul 19. This was lower than the consensus estimate of 221,000 and was the lowest level since Dec 6, 1969.
Steady job additions and low unemployment rate contributed to this record low initial claims. Also, the four-week moving average of initial claims dropped 2,750 to 220,500 for the week ended Jul 14. This metric is considered a better measure of labor market trends as it eliminates weekly fluctuations. (Read More: Weekly Jobless Claims Plunge to 48-Year Low: 5 Top Picks)
June’s Job Additions Beat Estimate
Domestic non-farm payrolls came in at 213,000 in June, significantly higher than the consensus estimate of 196,000, per the United States Bureau of Labor Statistics (BLS). Moreover, the BLS reported that April's job numbers were revised up by 16,000 to 175,000, while May's figure was upwardly revised by 21,000 to 244,000.
Meanwhile, average hourly earnings rose by 0.2% or 5 cents to $26.98 in June, lower than the consensus estimate and May’s figure of an increase of 0.3%. Further, the unemployment rate rose by 0.2% to 4% in June.
However, the unemployment rate increased slightly, because the labor force participation rate in June was 62.9%, reflecting a 0.2% increase from the prior month. Improvement in employment and gradual wage growth, with older workers retiring and leaving the labor force boosted the job participation rate. (Read More: U.S. Job Additions Exceed Expectations: 4 Fund Picks)
Buy These 5 Buy-Ranked Mutual Funds
The latest jobless claims data bodes well for the service-focused industry. Following these developments, investors may consider investing in service sector-related mutual funds. We have selected five mutual funds that flaunt a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one-year 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 Construction & Housing Portfolio (FSHOX - Free Report) invests a major portion of its assets in securities of companies involved in construction and design of commercial, residential and industrial facilities. FSHOX invests mainly in common stocks of both U.S. and non-U.S. companies.
FSHOX carries an expense ratio of 0.80% compared with the category average of 1.23%. Moreover, FSHOX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 10.7%.
FSHOX has a Zacks Mutual Fund Rank #2. Further, Neil Nabar is the fund manager of FSHOX since 2016.
T. Rowe Price Financial Services (PRISX - Free Report) seeks both capital growth and current income. The majority of its assets are invested in financial services sector companies. It may also purchase securities of companies involved in providing financial software. The fund uses fundamental bottom-up analysis in order to select securities.
PRISX carries an expense ratio of 0.85% compared with the category average of 1.41%. Moreover, PRISX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 13.3%.
PRISX has a Zacks Mutual Fund Rank #1. Further, Gabriel Solomon is the fund manager of PRISX since 2014.
Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) invests the majority of its assets in companies whose primary operations are related to software or information-based services. FSCSX primarily focuses on acquiring common stocks of both domestic and foreign companies. The fund uses fundamental analysis to select companies for investment purposes.
FSCSX carries an expense ratio of 0.73% compared with the category average of 1.41%. Moreover, FSCSX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 29.1%.
The fund sports a Zacks Mutual Fund Rank #2. Moreover, Ali Khan is the fund manager of FSCSX since 2014.
Prudential Jennison Financial Services A (PFSAX - Free Report) invests a huge portion of its assets in equity securities of companies that provide financial services. PFSAX may invest around 30% of its assets in non-U.S. companies.
PFSAX carries an expense ratio of 1.34% compared with the category average of 1.41%. Moreover, PFSAX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 11.6%.
PFSAX has a Zacks Mutual Fund Rank #2. Further, Steven A. Gavios is a fund manager of PFSAX since 2017.
Fidelity Select Health Care Services Portfolio (FSHCX - Free Report) invests a big part of its assets in companies that either own or are involved in operating hospital and nursing homes and are related to the healthcare services sector. The fund invests in securities of both U.S. and non-U.S. companies.
FSHCX carries an expense ratio of 0.77% compared with the category average of 1.35%. Moreover, FSHCX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 14.9%.
The fund has a Zacks Mutual Fund Rank #1. Moreover, Justin Segalini is the fund manager of FSHCX since 2016.
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 >>