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2 Funds to Benefit From Robust Apparel Spending

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Apparel spending during the holiday season hit its strongest pace of growth in the last eight years. A robust labor market, steadily rising wages and strong household finances, resulted in a surge in spending.

By the way, U.S. retail sales also hit record levels during this time. Under such encouraging conditions, investing in mutual funds with decent exposure to apparel stocks seems prudent.

Apparel Spending the Highest in 8 Years

Per a report from Mastercard SpendingPulse, U.S. apparel retailers recorded their best season in the last eight years. Sales across the broader apparel category witnessed a surge of 7.9% from before Thanksgiving through Christmas. This has been its best growth since 2010.

The report further stated that apparel sales gathered momentum from the back-to-school season, which extended through to Christmas.

US Holiday Retail Sales Strongest in 6 Years

Holiday retail sales grew at it fastest pace in the last six years, according to early data. Excluding automobiles, the metric jumped 5.1% between Nov 1 and Dec 24 compared with the year-ago period, per Mastercard SpendingPulse. The report also stated that U.S. e-commerce sales grew 18.1% from Nov 1 through Dec 19 on a year-over-year basis.

Further, Mastercard SpendingPulse stated that shoppers spent more than $850 billion this holiday season. Such spending was driven primarily by steadily increasing online sales, apparel sales and home improvement items. Online sales grew 26.4% from a year earlier between the Wednesday before Thanksgiving through Black Friday, per Adobe Analytics.

2 Best Funds to Buy Now

Given such circumstances, we have highlighted two 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 Consumer Discretionary Portfolio Fund (FSCPX - Free Report) invests in large-blend companies. The objective of FSCPX is to seek capital appreciation. FSCPX normally invests at least 80% of its assets in common stocks of companies principally engaged in the manufacture and distribution of goods and services to both domestic and international consumers.

This Sector – Other product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 10.2% and 10.5%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here

The Fidelity Select Consumer Discretionary Portfolio Fund carries a Zacks Mutual Fund Rank #1 and is managed by Fidelity, carries an expense ratio of 0.77%.  Moreover, FSCPX requires a minimal initial investment of $2,500.

FSCPX’s performance, as of the last filing, when compared to funds in its category was in the top 11% over the past three years and in the 7% over the past five years. Amazon and Nike are two of its top 10 holdings which deal in apparels.

Fidelity Select Retailing (FSRPX - Free Report) invests 80% of its assets in securities of companies that merchandise finished goods and services to individual customers. The fund invests in both U.S. and non-U.S. stocks.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 13.5% over the three-year and 14.8% 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

The Fidelity Select Retailing Fund carries a Zacks Mutual Fund Rank #2 and is managed by Fidelity, carries an expense ratio of 0.77%.  Moreover, FSRPX requires a minimal initial investment of $2,500.

FSRPX’s performance, as of the last filing, when compared to funds in its category was in the top 7% over the past three years and in the 1% over the past five years. Amazon, Ross Stores and Dollar Tree are three of its top 10 holdings which deal in apparels.

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