Back to top

3 Funds to Buy on Sturdy Factory Orders

Read MoreHide Full Article

Per the latest report from the Commerce Department, U.S. factory orders increased 0.6% in June. This rise follows back-to-back declines in two previous months. The metric came in below the consensus estimate of an increase of 0.7%.

Meanwhile, U.S. factory orders for large manufactured goods rose 2% in the month of June after two back-to-back declines. The metric was boosted by higher demand for aircrafts and cars. These reports shed light on the fact that America’s manufacturing sector is recovering fast and is set to grow further in the days to come.

Also, the U.S. economy just entered the longest phase of economic expansion in history. Under such broadly encouraging conditions, investing in mutual funds from the industrial sector seems prudent.

U.S. Factory Orders Get a Nudge

On Aug 2, the Commerce Department stated that U.S. factory orders for June rose to $$493.8 billion. Further, new orders for manufactured durable goods also increased 1.9% to $245.4 billion in the month. Orders for transportation equipment rose 3% in June to $88.7 billion, providing a major boost to overall growth.

Notably, the country’s GDP has expanded for the last 121 months on the trot. This period of sustained economic expansion, the longest in history, also surpassed the 120-month expansion from 1991 to 2001.

The current phase of expansion started in 2009, after the global financial crisis in 2008 led to a global depression which was the worst U.S. economic downturn since the Great Depression in the 1920s and ’30s.

3 Best Funds to Buy Now

Given such positives, we have highlighted three 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 one-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 Defense and Aerospace Portfolio (FSDAX - Free Report) funds invests a huge portion of its assets in securities of companies involved primarily in the research, manufacture and sale of products and services as per the defense or aerospace industries. The fund seeks capital growth by investing 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 20.3% over the three-year and 16.4% 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.

FSDAX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.75%, which is below the category average of 1.01%.

Fidelity Select Chemicals Portfolio (FSCHX - Free Report)  funds seeks capital appreciation. The fund normally invests at least 80% of its assets in common stocks of companies principally engaged in the research, development, manufacture or marketing of products or services related to the chemical process industries.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.8% over the three-year and 4.2% 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.

FSCHX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.77%, which is below the category average of 1.37%.

Fidelity Select Industrials Portfolio (FCYIX - Free Report) fund 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 10.4% over the three-year and 8.9% 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 #2 and an annual expense ratio of 0.76%, which is below the category average of 1.01%.

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 >>

Published in