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3 Top Funds to Buy on Sturdy Factory Orders

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Per the latest report from the Commerce Department, U.S. factory orders increased 0.7% in September. This marked its second consecutive rise in as many months. New orders for goods made within the United States was boosted primarily by strong demand for transportation equipment. The metric was also boosted by robust demand for motor vehicles, primary metals, machinery and computers, and electronic products.

Under such encouraging conditions, investing in mutual funds from the industrial sector seems prudent.

U.S. Factory Orders Rise More than Expected in September

On Nov 2, the Commerce Department stated that U.S. factory orders for September rose $3.4 billion to $515.3 billion. Further, new orders for manufactured durable goods also increased 0.7% to $262 billion in the month. This marked its third increase in the past four months.

Orders for transportation equipment rose 1.9%, providing a major boost to overall growth. Further, orders of shipments increased 0.8% to $1,186.5 billion in September, rising for the sixteenth time in the past seventeen months.

Moreover, orders of motor vehicles increased 0.5% in the month and that for unfilled orders for manufactured durable goods increased 0.8%. The metric has registered an increase in 10 of the past 11 months. Finally, inventories of manufactured durable goods gained 0.7% in September, up for 20 of the last 21 months.

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 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 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 16.6% over the three-year and 11.2% 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 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 17.6% and 15.5% over the three-year and five-year benchmarks, respectively. 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 Mutual Fund Rank #2 and an annual expense ratio of 0.80%, which is below the category average of 1.04%.

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 26.4% over the three-year and 17.2% 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 Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.04%.

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