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The U.S. equity markets have done remarkably well in the first half of 2019, with the three major indexes posting solid gains on the back of Federal Reserve’s dovish stance and positive outcomes of the Trump-Xi meet at the G-20. Equities closed 1H with their best performance in years despite fears of a global economic slowdown, uneasiness in the Middle East, and trade tension between the United States and its trade partners.
Let us take a look at the sectors that gained exceptionally despite the odds, so we may invest in a few sector-specific mutual funds.
Broad-Based Gains in H1 of 2019
It is noteworthy that all 11 of the S&P 500’s sectors increased in the first half of the year, with technology (27.9%), consumer discretionary (21.5%), industrials (20.3%) and communication services (20.2%) posting the biggest year-to-date gains.
The S&P 500 gained from its big drop in December on the back of a trade truce between the United States and China in Q1, during which the index gained more than half of its H1 growth.
The Technology Select Sector SPDR Fund (XLK), which rallied the most among S&P 500’s 11 sectors, registered almost half of its gains in June. Optimism around President Donald Trump and his Chinese counterpart’s talks at the G-20 summit and hopes on Fed’s rate cuts were instrumental in boosting the sector.
In addition, resumed business between China’s Huawei Technologies and American tech firms pushed the chipmakers higher. The gains in Communication Services Select Sector SPDR Fund (XLC) can also be attributed to the aforementioned factors.
The Consumer Discretionary Select Sector SPDR Fund (XLY), which registered the second-highest gain, rose on a sound labor market, subdued inflation, Fed’s low interest rates and adequate wage gains that drove consumers to spend heartily on discretionary items.
Lastly, the sound growth in Industrial Select Sector SPDR Fund (XLI) can be attributed to Trump’s efforts to bring manufacturing jobs back to the country.
Given the significant growth in the aforementioned sectors in H1, one could consider adding mutual funds to one’s portfolio that invest heavily in them.
Now we come to the most vital question: 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).
Our Choices
We have selected four such mutual funds for you. All these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is less than $5000.
We expect these funds to outperform their peers in the future.
Janus Henderson Global Technology Fund Class T (JAGTX - Free Report) aims for long-term capital growth. The fund invests the majority of its assets in securities of companies that the portfolio managers feel will benefit immensely from technological advances. The fund invests in equity securities of U.S. and non-U.S. companies that have good potential for growth.
This Zacks sector – Tech 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.
The fund has an annual expense ratio of 0.92%, which is below the category average of 1.29%. It has year-to-date returns of 19.2%.The fund has a minimum initial investment of $2500.
Fidelity Select Industrials Portfolio (FCYIX - Free Report) fund mostly invests in common stocks and aims for capital appreciation. The non-diversified fund invests the majority of its assets in companies that research, develop, manufacture, distribute, supply or market industrial products, services or equipment. The fund invests in U.S. and non-U.S. issuers alike.
This Zacks sector – Other 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.
The fund has an annual expense ratio of 0.76%, which is below the category average of 1.01%. It has year-to-date returns of 16.3%.The fund has no minimum initial investment.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund is a non-diversified mutual fund that mostly invests in common stocks. It aims for capital growth and invests most of its assets in securities of companies that design, produce or distribute goods or offer services in the leisure industries. The fund invests in both U.S. and non-U.S. companies.
This Zacks sector – Other 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.
The fund has an annual expense ratio of 0.76%, which is below the category average of 1.15%. It has year-to-date returns of 15.5%.The fund has no minimum initial investment.
Columbia Seligman Communications and Information Fund Advisor Class (SCIOX - Free Report) aims for capital gain. The fund invests a large chunk of its assets in securities of companies that operate in communications, information and related industries. SCIOX also invests in information technology and telecommunications sectors, along with investing in the media industry. The non-diversified fund also invests a minority of its assets in non-U.S. investments.
This Zacks sector – Tech 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.
The fund has an annual expense ratio of 0.98%, which is below the category average of 1.29%. It has year-to-date returns of 15.9%.The fund has no minimum initial investment.
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4 Mutual Funds From Sectors That Gained Big in H1
The U.S. equity markets have done remarkably well in the first half of 2019, with the three major indexes posting solid gains on the back of Federal Reserve’s dovish stance and positive outcomes of the Trump-Xi meet at the G-20. Equities closed 1H with their best performance in years despite fears of a global economic slowdown, uneasiness in the Middle East, and trade tension between the United States and its trade partners.
Let us take a look at the sectors that gained exceptionally despite the odds, so we may invest in a few sector-specific mutual funds.
Broad-Based Gains in H1 of 2019
It is noteworthy that all 11 of the S&P 500’s sectors increased in the first half of the year, with technology (27.9%), consumer discretionary (21.5%), industrials (20.3%) and communication services (20.2%) posting the biggest year-to-date gains.
The S&P 500 gained from its big drop in December on the back of a trade truce between the United States and China in Q1, during which the index gained more than half of its H1 growth.
The Technology Select Sector SPDR Fund (XLK), which rallied the most among S&P 500’s 11 sectors, registered almost half of its gains in June. Optimism around President Donald Trump and his Chinese counterpart’s talks at the G-20 summit and hopes on Fed’s rate cuts were instrumental in boosting the sector.
In addition, resumed business between China’s Huawei Technologies and American tech firms pushed the chipmakers higher. The gains in Communication Services Select Sector SPDR Fund (XLC) can also be attributed to the aforementioned factors.
The Consumer Discretionary Select Sector SPDR Fund (XLY), which registered the second-highest gain, rose on a sound labor market, subdued inflation, Fed’s low interest rates and adequate wage gains that drove consumers to spend heartily on discretionary items.
Lastly, the sound growth in Industrial Select Sector SPDR Fund (XLI) can be attributed to Trump’s efforts to bring manufacturing jobs back to the country.
Given the significant growth in the aforementioned sectors in H1, one could consider adding mutual funds to one’s portfolio that invest heavily in them.
Now we come to the most vital question: 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).
Our Choices
We have selected four such mutual funds for you. All these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is less than $5000.
We expect these funds to outperform their peers in the future.
Janus Henderson Global Technology Fund Class T (JAGTX - Free Report) aims for long-term capital growth. The fund invests the majority of its assets in securities of companies that the portfolio managers feel will benefit immensely from technological advances. The fund invests in equity securities of U.S. and non-U.S. companies that have good potential for growth.
This Zacks sector – Tech 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.
The fund has an annual expense ratio of 0.92%, which is below the category average of 1.29%. It has year-to-date returns of 19.2%.The fund has a minimum initial investment of $2500.
Fidelity Select Industrials Portfolio (FCYIX - Free Report) fund mostly invests in common stocks and aims for capital appreciation. The non-diversified fund invests the majority of its assets in companies that research, develop, manufacture, distribute, supply or market industrial products, services or equipment. The fund invests in U.S. and non-U.S. issuers alike.
This Zacks sector – Other 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.
The fund has an annual expense ratio of 0.76%, which is below the category average of 1.01%. It has year-to-date returns of 16.3%.The fund has no minimum initial investment.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund is a non-diversified mutual fund that mostly invests in common stocks. It aims for capital growth and invests most of its assets in securities of companies that design, produce or distribute goods or offer services in the leisure industries. The fund invests in both U.S. and non-U.S. companies.
This Zacks sector – Other 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.
The fund has an annual expense ratio of 0.76%, which is below the category average of 1.15%. It has year-to-date returns of 15.5%.The fund has no minimum initial investment.
Columbia Seligman Communications and Information Fund Advisor Class (SCIOX - Free Report) aims for capital gain. The fund invests a large chunk of its assets in securities of companies that operate in communications, information and related industries. SCIOX also invests in information technology and telecommunications sectors, along with investing in the media industry. The non-diversified fund also invests a minority of its assets in non-U.S. investments.
This Zacks sector – Tech 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.
The fund has an annual expense ratio of 0.98%, which is below the category average of 1.29%. It has year-to-date returns of 15.9%.The fund has no minimum initial investment.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>