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3 Mutual Funds to Make the Most of This Holiday Season

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Mutual fund investors who wish to take advantage of this year’s holiday season could find it prudent at present to take a look at funds that invest in securities of retail, consumer discretionary, and leisure and entertainment companies. After all, the moderate rise in consumer spending in September, the current low-interest rate environment and decent job additions in October could boost the holiday shopping spree.

Let us, therefore, consider a few mutual funds from the aforementioned sectors.

Holiday Season 2019 Appears Bright, Here’s Why

Specifically considering why investors may expect this holiday season sales to be robust, one needs to take a look at the National Retail Federation (NRF) report. Per the NRF in October, holiday retail sales during November and December are expected to rise between 3.8% and 4.2% over last year to a total of between $727.9 billion and $730.7 billion.

In fact, NRF President and CEO Matthew Shay also said that the American economy is growing and consumer spending is still the major reason behind this growth.

Secondly, a decent number of new job additions in October indicates that the labor market remains robust. Total nonfarm payroll employment last month rose by 128,000, with broad-based new job additions, per the Bureau of Labor Statistics.

Furthermore, a low-interest-rate environment might prove to be instrumental in boosting consumer spending in the holiday season ahead. The central bank cut its benchmark rates by an expected quarter-point on Oct 30. The current Federal rates are now in the range of 1.5% to 1.75%.

Our Choices

We have, therefore, selected three top mutual funds that invest in retail, consumer discretionary, leisure and entertainment. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date returns. In addition, the minimum initial investment is within $5,000.

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 Leisure Portfolio (FDLSX - Free Report) fund aims for capital growth. The fund, which mostly invests in common stocks, invests the majority of its assets in securities of companiesengaged in the design, production, or distribution of goods or services in the leisure industries.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDLSX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.76%, which is below the category average of 1.26%. It has returned 20% on a year-to-date basis. FDLSXhas no minimum initial investment.

Fidelity Select Consumer Discretionary Portfolio (FSCPX - Free Report) fund invests the majority of its assets in securities of companies engaged in the manufacture and distribution of consumer discretionary products and services. FSCPX aims for capital appreciation and invests mostly in common stocks.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCPX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.78%, which is below the category average of 1.26%. It has returned 21.3% on a year-to-date basis. FSCPXhas no minimum initial investment.

Fidelity Select Retailing Portfolio (FSRPX - Free Report) fund seeks capital growth. The fund invests the majority of its assets in securities of companies engaged in merchandising finished goods and services primarily to individual consumers. FSRPX primarily invests in common stocks.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRPX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.76%, which is below the category average of 1.26%. It has returned 23.9% on a year-to-date basis. FSRPXhas no minimum initial investment.

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