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Unemployment Rate Remains Flat: 4 Funds to Buy

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Per the latest report from the Bureau of Labor Statistics (BLS), unemployment rate in the United States for the month of November remained unchanged from last month. But lower than expected job gains gave rise to speculation that the economy is losing steam. However, the fact that there have been more-than-sufficient job additions each month to keep unemployment at a 49-year low indicates that the economic recovery is likely to continue.

Professional and business services led job gains, followed by healthcare, manufacturing and transportation. In this context, we have focused on those mutual funds that have significant exposure to these sectors.

Unemployment at 49-Year Low

The unemployment rate in the United States remained flat at 3.7% in November, its lowest level since December 1969. The metric remained unchanged for the third month on the trot. Notably, the number of unemployed persons and the unemployment rate experienced yearly declines of 0.4% and 641,000, respectively.

Further, the total number of employed individuals in the economy increased from 156.6 million to 156.8 million last month. Also, the total number of long-term unemployed persons declined 120,000 to 1.3 million in November. Meanwhile, the employment-population ratio was unchanged at 60.6% — its highest level since December 2008.

Industries That Led Hiring

The economy added 155,000 jobs in November, lower than the consensus estimate of 198,000. However, a lesser number of job additions should not bother investors as experts believe that the economy has been consistently adding twice as many jobs as is needed to keep the unemployment rate low.

Notably, monthly job additions have averaged 209,000 over the past year. Sectors such as healthcare, manufacturing, retail trade and transportation and warehousing were at the forefront in terms of job additions, with each adding 32,000, 27,000, 18,000 and 25,000 jobs, respectively. Professional and business services added 32,000 jobs.

4 Best Funds to Buy Now

Given such positives, we have highlighted four 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 8.6% over the three-year and 7.6% 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 1.18%.

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 12% and 12.1% 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 #1 and an annual expense ratio of 0.80%, which is below the category average of 1.18%.

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 to select securities.

This Sector-Finance product has a history of positive total returns for over 10 years. Specifically, the fund has returned 9.7% and 9.6% 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.

PRISXhas a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.85%, which is below the category average of 1.43%.

Fidelity Select Health Care Services Portfolio (FSHCX - Free Report) invests a large 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.

This Sector-Health product has a history of positive total returns for over 10 years. Specifically, the fund has returned 15.9% and 16.8% 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 #1 and an annual expense ratio of 0.76%, which is below the category average of 1.28%.

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