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Wage Growth Best Since the Great Recession: 5 Fund Picks
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Jobs data remained upbeat in August, with job creations being significantly higher than July’s figure. Steady gains in employment pushed workers’ pay higher, with average hourly wages increasing to the best level last seen since 2009, when the Great Recession ended.A better-than-expected jobs report, including an increase in wages indicated a rosier economy.
Sectors like construction, manufacturing, health care and mining, and private service providers witnessed strong job gains. In this context, investing in mutual funds with significant exposure to these sectors is considered a strong investment choice. After all, such a hiring spree indicated that these sectors are in an expansion mode and their businesses are churning out huge profits.
August’s Job Additions Beat Estimate
Domestic non-farm payrolls advanced 201,000 in August, significantly higher than the consensus estimate of 193,000, per the United States Bureau of Labor Statistics (BLS). Moreover, the BLS reported that August's job numbers were better than the downwardly revised July’s figure of 147,000.
Additionally, average hourly earnings rose by 0.4% or 10 cents to $27.16 in August, higher than the July’s figure of an increase of 0.3%. In the past year, average hourly wages advanced 2.9% or 77 cents, registering its best growth since 2009. Further, the unemployment rate was unchanged at 3.9% in August, but remained near its lowest level since 1969.
Industries That Experienced Job Gains
The professional and business services industry added around 53,000 jobs last month, and had 519,000 new jobs created in the past 12 months. Additionally, the healthcare industry created about 33,000 jobs last month, and had 301,000 new jobs over the past one year. Employment in wholesale trade industry was around 22,000 in August and 99,000 in the past 12 months.
Transportation and warehousing created about 20,000 in August and advanced by 173,000 in the past one year. Also, the mining industry added 6,000 in August and 104,000 since a recent low in October 2016. Employment in construction industry was about 23,000 in August and 297,000 in the past 12 months.
Buy These 5 Sectoral Mutual Funds
Here we have selected five mutual funds that have significant exposure to sectors that saw strong job additions in August. All these funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Further, these funds have encouraging one-year annualized returns and minimum initial investment within $5000. Also, these funds have 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 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 1.37%. Moreover, FSCSX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 34%.
The fund carries a Zacks Mutual Fund Rank #2. Ali Khan is the fund manager of FSCSX since 2014. Further, as of the last filing, Microsoft is the top holding for FSCSX.
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 has an annual 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 15.4%.
PFSAX has a Zacks Mutual Fund Rank #2. Further, Steven A. Gavios is one of the fund managers of PFSAX since 2017. Further, as of the last filing, Fleetcor Technologies is the top holding for PFSAX.
Fidelity Advisor Health Care Fund A (FACDX - Free Report) seeks appreciation of capital. FACDX invests in securities issued by companies engaged in the design, production and sale of products or services used in the healthcare sector. The fund normally invests in both U.S. as well as non-U.S. companies.
FACDX carries an expense ratio of 1.04%, lower than the category average of 1.37%. Moreover, FACDX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 25.2%.
The fund carries a Zacks Mutual Fund Rank #2. Edward L. Yoon is the fund manager of FACDX since 2008. Further, as of the last filing, UnitedHealth Group is the top holding for FACDX.
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 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 has an annual 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 16.9%.
PRISX has a Zacks Mutual Fund Rank #1. Further, Gabriel Solomon is the fund manager of PRISX since 2014. Further, as of the last filing, Wells Fargo is the top holding for PRISX.
Fidelity Select Air Transportation Portfolio invests a bulk of its assets in companies primarily engaged in providing air transport services all over the world. FSAIX focuses on acquiring common stocks of companies, depending on factors such as financial strength and economic condition.
FSAIX has an annual expense ratio of 0.82% compared with the category average of 1.22%. Moreover, FSAIX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 17.4%.
FSAIX has a Zacks Mutual Fund Rank #2. Further, Matthew Moulis is the fund manager of FSAIX since 2012. Further, as of the last filing, Delta Air Lines is the top holding for FSAIX.
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Wage Growth Best Since the Great Recession: 5 Fund Picks
Jobs data remained upbeat in August, with job creations being significantly higher than July’s figure. Steady gains in employment pushed workers’ pay higher, with average hourly wages increasing to the best level last seen since 2009, when the Great Recession ended.A better-than-expected jobs report, including an increase in wages indicated a rosier economy.
Sectors like construction, manufacturing, health care and mining, and private service providers witnessed strong job gains. In this context, investing in mutual funds with significant exposure to these sectors is considered a strong investment choice. After all, such a hiring spree indicated that these sectors are in an expansion mode and their businesses are churning out huge profits.
August’s Job Additions Beat Estimate
Domestic non-farm payrolls advanced 201,000 in August, significantly higher than the consensus estimate of 193,000, per the United States Bureau of Labor Statistics (BLS). Moreover, the BLS reported that August's job numbers were better than the downwardly revised July’s figure of 147,000.
Additionally, average hourly earnings rose by 0.4% or 10 cents to $27.16 in August, higher than the July’s figure of an increase of 0.3%. In the past year, average hourly wages advanced 2.9% or 77 cents, registering its best growth since 2009. Further, the unemployment rate was unchanged at 3.9% in August, but remained near its lowest level since 1969.
Industries That Experienced Job Gains
The professional and business services industry added around 53,000 jobs last month, and had 519,000 new jobs created in the past 12 months. Additionally, the healthcare industry created about 33,000 jobs last month, and had 301,000 new jobs over the past one year. Employment in wholesale trade industry was around 22,000 in August and 99,000 in the past 12 months.
Transportation and warehousing created about 20,000 in August and advanced by 173,000 in the past one year. Also, the mining industry added 6,000 in August and 104,000 since a recent low in October 2016. Employment in construction industry was about 23,000 in August and 297,000 in the past 12 months.
Buy These 5 Sectoral Mutual Funds
Here we have selected five mutual funds that have significant exposure to sectors that saw strong job additions in August. All these funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Further, these funds have encouraging one-year annualized returns and minimum initial investment within $5000. Also, these funds have 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 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 1.37%. Moreover, FSCSX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 34%.
The fund carries a Zacks Mutual Fund Rank #2. Ali Khan is the fund manager of FSCSX since 2014. Further, as of the last filing, Microsoft is the top holding for FSCSX.
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 has an annual 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 15.4%.
PFSAX has a Zacks Mutual Fund Rank #2. Further, Steven A. Gavios is one of the fund managers of PFSAX since 2017. Further, as of the last filing, Fleetcor Technologies is the top holding for PFSAX.
Fidelity Advisor Health Care Fund A (FACDX - Free Report) seeks appreciation of capital. FACDX invests in securities issued by companies engaged in the design, production and sale of products or services used in the healthcare sector. The fund normally invests in both U.S. as well as non-U.S. companies.
FACDX carries an expense ratio of 1.04%, lower than the category average of 1.37%. Moreover, FACDX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 25.2%.
The fund carries a Zacks Mutual Fund Rank #2. Edward L. Yoon is the fund manager of FACDX since 2008. Further, as of the last filing, UnitedHealth Group is the top holding for FACDX.
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 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 has an annual 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 16.9%.
PRISX has a Zacks Mutual Fund Rank #1. Further, Gabriel Solomon is the fund manager of PRISX since 2014. Further, as of the last filing, Wells Fargo is the top holding for PRISX.
Fidelity Select Air Transportation Portfolio invests a bulk of its assets in companies primarily engaged in providing air transport services all over the world. FSAIX focuses on acquiring common stocks of companies, depending on factors such as financial strength and economic condition.
FSAIX has an annual expense ratio of 0.82% compared with the category average of 1.22%. Moreover, FSAIX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 17.4%.
FSAIX has a Zacks Mutual Fund Rank #2. Further, Matthew Moulis is the fund manager of FSAIX since 2012. Further, as of the last filing, Delta Air Lines is the top holding for FSAIX.
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 >>