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4 Mutual Funds to Buy as U.S. Service Sector Gains Momentum

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The U.S. service sector gained in November, backed by a strong domestic economy. The Institute for Supply Management’s data on Dec 6 indicated that service providers such as retailers, healthcare services and consumer discretionary producers and suppliers are optimistic about the present economic conditions.

Given the fact that holiday season is around the corner, it could be a prominent factor behind the bullishness among service providers as well. Therefore, considering the expansion in the country’s service sector, it could be profitable to invest in a few related mutual funds.

U.S. Service Sector in Good Shape                                  

The ISM non-manufacturing index rose in November, beating economists’ estimates of 59.7, to reach a seasonally-adjusted figure of 60.7 and increasing from the October reading of 60.3. A reading higher than 50 suggests that the non-manufacturing sector is growing in general.

ISM non-manufacturing index’s November reading is the second highest in more than a decade, establishing the strong growth in the country’s service sector.

“The non-manufacturing sector continued to reflect strong growth in November. However, concerns persist about employment resources and the impact of tariffs. Respondents remain positive about current business conditions and the direction of the economy,” ISM chair, Anthony Nieves, said.

Per a CNBC report, the data was released after Moody’s Analytics and ADP reported that businesses slowed down their swiftness in new job additions in November due to a tight labor market. The two research firms reported that private sector employment added 179,000 jobs in November against Refinitiv economists’ estimation of 195,000.

What Funds Could Benefit from the U.S. Service Sector Gain?

According to the ADP National Employment report, most of the new job additions were by medium-size companies, accounting for 119,000 roles. Among sectors, the nation’s service providers added 163,000 jobs while professional and business services added 59,000 positions. This accounted for the most newly-added jobs among the broad-based sub-sectors.

Education and health services added 49,000 jobs while health care and social assistance added 37,000 jobs. Other sub-sectors were responsible for new job additions too, the most prominent ones being administrative and support services, leisure and hospitality and professional and technical services.

Taking into consideration the aforementioned report, it would be prudent to invest in mutual funds that invest in professional and business service-providing companies. These funds have a minimum initial investment of less than or equal to $5,000.

4 Mutual Funds to Buy

JHancock Financial Industries A (FIDAX - Free Report) aims for capital growth by investing almost 80% of its net assets in equity securities in the country and foreign financial service businesses.

This Sector – Finance product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FIDAX has a Zacks Mutual Fund Rank #1 (Strong Buy) and an annual expense ratio of 1.20%, which is below the category average of 1.43%. The fund has three and five-year returns of 8.41% and 7.08%, respectively.

Fidelity Select Health Care Svcs Port (FSHCX - Free Report) invests no less than 80% of its assets in securities of companies that are engaged in the management of nursing homes, hospitals, health maintenance organizations etc.

This Sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSHCX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.28%. The fund has three and five-year returns of 18.41% and 16.70%, respectively.

Fidelity Select Leisure (FDLSX - Free Report) seeks to primarily invest in common stocks. The fund invests more than 80% of its assets in businesses that are involved in the leisure industries.

This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.33%. The fund has three and five-year returns of 11.25% and 9.78%, respectively.

Fidelity Select Consumer Discret Port (FSCPX - Free Report) primarily invests in common stocks. The fund invests about 80% of its assets in securities of businesses that are engaged in the area of consumer discretionary services and products.

This Sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.33%. The fund has three and five-year returns of 10.17% and 10.46%, respectively.

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