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4 Funds to Buy From Sectors That Added Most Jobs in June
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Employment data for June exceeded expectations, with nonfarm payrolls surging despite fears of a slowdown in the economy and lower U.S. manufacturing activity. The labor market paid no heed to trade tensions and falling bond yields in June and carried on with strong hiring.
And with the United States and China back at the negotiation table, brighter prospects may be expected for the U.S. economy ahead. Therefore, investing in mutual funds that focus heavily on sectors which added maximum jobs last month makes sense.
Strong Job Additions in June
According to the Labor department, payroll additions rebounded robustly in June, with the United States adding 224,000 new jobs. The figure significantly surpassed analyst expectations of 170,000. New job gains were broad-based, with job roles added across professional and business services, healthcare, transportation and construction etc.
Impressive new job additions not only calmed fears of a sharp slowdown in the economy, but also lowered chances of any Fed rate cut later this month. In fact, average hourly earnings in June increased by 6 cents to $27.90 for all employees on private nonfarm payrolls. This marks a rise of 3.1% in average hourly earnings in the past year.
In addition, the unemployment rate edged up to 3.7% from 3.6% in May but still remained at a 50-year low.
Sectors With Maximum New Jobs
Professional and business services added 51,000 new jobs in June, surpassing all other sectors, with new job additions in the sector significantly more than May’s 24,000 gains. Healthcare added the maximum number of new jobs over the month after professional and business services, with 35,000 job additions in ambulatory health care services (+19,000) and hospitals (+11,000).
Transportation and warehousing added 24,000 new jobs in June. Couriers and messengers added the most within the sector (+7,000). Construction was the fourth sector to add the highest new jobs, at 21,000 new roles. Lastly, manufacturing added 17,000 new jobs over the month. Computer and electronic products (+7,000), and plastics and rubber products (+4,000) added maximum new job roles within the sector.
Our Top 4 Choices
We have selected mutual funds from the top sectors mentioned above. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform 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 Health Care (FSPHX - Free Report) fund aims for capital growth. FSPHX invests a majority of its assets in securities of companies primarily engaged in activities in the healthcare sector. The non-diversified fund mostly invests in common stocks of U.S. and non-U.S. companies alike. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks 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.
FSPHX has an annual expense ratio of 0.71%, which is below the category average of 1.22%. The fund has year-to-date return of 13.4% and no minimum initial investment.
Deutsche Real Estate Securities A (RRRAX - Free Report) fund aims for capital growth over the long-term. The fund invests the majority of its assets in equity securities of real estate investment trusts and real estate companies. The non-diversified fund may also invest inbonds, notes, short-term securities, securities of companies not primarily engaged in the real estate industry and other similar securities. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks sector – Real Estate 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.
RRRAX has an annual expense ratio of 0.97%, which is below the category average of 1.22%. The fund has year-to-date return of 18.8% and a minimum initial investment of $1000.
Fidelity Select Industrials (FCYIX - Free Report) fund seeks capital growth by investing 80% of its net assets in companies that are engaged in manufacturing, distribution, supply or sale of industrial products, equipment or services. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks 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.
FCYIX has an annual expense ratio of 0.76%, which is below the category average of 1.01%. The fund has year-to-date return of 24.2%. It has no minimum initial investment.
Fidelity Select Transportation (FSRFX - Free Report) fund seeks capital growth. The non-diversified fund mostly invests in common stocks. FSRFX invests the majority of its assets in securities of companies that offer transportation services or are engaged in activities in the transportation sector. The fund carries a Zacks Mutual Fund Rank #2.
This Zacks 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.
FSRFX has an annual expense ratio of 0.79%, which is below the category average of 1.01%. The fund has year-to-date return of 13.3%. It has no minimum initial investment.
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4 Funds to Buy From Sectors That Added Most Jobs in June
Employment data for June exceeded expectations, with nonfarm payrolls surging despite fears of a slowdown in the economy and lower U.S. manufacturing activity. The labor market paid no heed to trade tensions and falling bond yields in June and carried on with strong hiring.
And with the United States and China back at the negotiation table, brighter prospects may be expected for the U.S. economy ahead. Therefore, investing in mutual funds that focus heavily on sectors which added maximum jobs last month makes sense.
Strong Job Additions in June
According to the Labor department, payroll additions rebounded robustly in June, with the United States adding 224,000 new jobs. The figure significantly surpassed analyst expectations of 170,000. New job gains were broad-based, with job roles added across professional and business services, healthcare, transportation and construction etc.
Impressive new job additions not only calmed fears of a sharp slowdown in the economy, but also lowered chances of any Fed rate cut later this month. In fact, average hourly earnings in June increased by 6 cents to $27.90 for all employees on private nonfarm payrolls. This marks a rise of 3.1% in average hourly earnings in the past year.
In addition, the unemployment rate edged up to 3.7% from 3.6% in May but still remained at a 50-year low.
Sectors With Maximum New Jobs
Professional and business services added 51,000 new jobs in June, surpassing all other sectors, with new job additions in the sector significantly more than May’s 24,000 gains. Healthcare added the maximum number of new jobs over the month after professional and business services, with 35,000 job additions in ambulatory health care services (+19,000) and hospitals (+11,000).
Transportation and warehousing added 24,000 new jobs in June. Couriers and messengers added the most within the sector (+7,000). Construction was the fourth sector to add the highest new jobs, at 21,000 new roles. Lastly, manufacturing added 17,000 new jobs over the month. Computer and electronic products (+7,000), and plastics and rubber products (+4,000) added maximum new job roles within the sector.
Our Top 4 Choices
We have selected mutual funds from the top sectors mentioned above. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform 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 Health Care (FSPHX - Free Report) fund aims for capital growth. FSPHX invests a majority of its assets in securities of companies primarily engaged in activities in the healthcare sector. The non-diversified fund mostly invests in common stocks of U.S. and non-U.S. companies alike. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks 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.
FSPHX has an annual expense ratio of 0.71%, which is below the category average of 1.22%. The fund has year-to-date return of 13.4% and no minimum initial investment.
Deutsche Real Estate Securities A (RRRAX - Free Report) fund aims for capital growth over the long-term. The fund invests the majority of its assets in equity securities of real estate investment trusts and real estate companies. The non-diversified fund may also invest inbonds, notes, short-term securities, securities of companies not primarily engaged in the real estate industry and other similar securities. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks sector – Real Estate 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.
RRRAX has an annual expense ratio of 0.97%, which is below the category average of 1.22%. The fund has year-to-date return of 18.8% and a minimum initial investment of $1000.
Fidelity Select Industrials (FCYIX - Free Report) fund seeks capital growth by investing 80% of its net assets in companies that are engaged in manufacturing, distribution, supply or sale of industrial products, equipment or services. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks 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.
FCYIX has an annual expense ratio of 0.76%, which is below the category average of 1.01%. The fund has year-to-date return of 24.2%. It has no minimum initial investment.
Fidelity Select Transportation (FSRFX - Free Report) fund seeks capital growth. The non-diversified fund mostly invests in common stocks. FSRFX invests the majority of its assets in securities of companies that offer transportation services or are engaged in activities in the transportation sector. The fund carries a Zacks Mutual Fund Rank #2.
This Zacks 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.
FSRFX has an annual expense ratio of 0.79%, which is below the category average of 1.01%. The fund has year-to-date return of 13.3%. It 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 >>