Per the latest report from the Federal Reserve bank, the Philly Fed manufacturing index improved considerably in the current month on the back of a bump in new orders. Further, industrial production is on track to register its best level since 2010.
Industrial production has, in fact, rebounded in the month of August due to higher automobile and utilities production. Also, the ISM Manufacturing index surged to its best levels in 14 years. Investors looking to cash in on this opportunity should look no further than investing in mutual funds having significant exposure to the manufacturing sector.
U.S. Manufacturing Activity is Flourishing
The Philly Fed manufacturing index exhibited a strong rebound in September. The metric has expanded at a faster pace of 22.9% in the current month than 11.9% in August.
When the index is above 0%, it indicates factory-sector growth. Further, such an increase also depicts that general business conditions in the region have been improving steadily. The surge in the metric has been achieved on the back of a bump in the new orders index, which is at 21.4%. Also, the shipment index has gained about 3 percentage points to hit 19.6% in the month.
Per the latest data from the Institute for Supply Management, the manufacturing index increased for the 112th month on the trot. The index expanded by 3.2% from July to reach 61.3% in August. The metric surpassed the estimated 57.7% mark in the month as well as 58.1% it had hit in the previous month.
Such an increase points toward a strengthening U.S. economy and was buoyed by an increase in new orders and production. While the new orders index surged to 65.1% in August, the production index was at 63.3%. Further, employment index touched 58.5% in the month — its highest level in six months. Finally, the supplier deliveries index reached 64.5% in August to hit its best level since 2004.
3 Best Funds to Buy Now
Given such positives, we have highlighted three mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-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 the common stock 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 14.6% 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 Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.04%.
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. The fund has returned 22.9% over the three-year and 17.7% 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 sports a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.04%.
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 6.2% over the three-year and 5.8% 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 1.17%.
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