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3 Funds to Make the Most of a Rebound in Retail Sales
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Per the latest report from the U.S. Census Bureau, retail sales sprung back to life in the month of May. The metric surged 17.7% in the month, surpassing the consensus estimate of 8.2%. Such an increase follows record declines of 14.7% in April and 8.2% in March.
U.S. retailers benefited primarily from the reopening of the American economy after the COVID-19 lockdown which is touted to be the shortest yet deepest recession in America’s history.
Apart from economic reopening, what also supported retail sales last month was pent-up consumer demand stemming from having to stay at home to maintain social distancing. Furthermore, unemployment benefits and federal tax payments to families were also pivotal in supporting higher sales in the month.
However, on a year-over-year basis, the metric was down 6% from the same month in 2019, shedding light on the fact that the economy will take time to recover from the damage that the pandemic-related lockdown has inflicted on it.
Talking about the figures, auto-dealers witnessed a 44% surge in May sales. This pushed up overall sales as the auto sector typically contributes approximately 20% to total retail sales. Meanwhile, sales excluding automobiles also rose a record 12.4%.
Further, clothing stores and home-furnishing stores witnessed a surge in sales by as much as 188% and 90%, respectively. Meanwhile, stores that sell books, music, sporting goods and hobby items reported an increase in sales by 88%. Notably these three sectors were impacted badly in April.
Sales at gas stations increased 13% and receipts at bars and restaurants witnessed an uptick of 29% last month. Finally, Internet-based retailers reported an increase of 9% in sales in May.
3 Mutual Funds to Buy
We have selected three funds that can make the most of this uptick in retail sales. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-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 (FSCPX - Free Report) fund invests a large portion of its assets in securities of companies that manufacture and distribute consumer discretionary goods and services. The fund invests in both domestic and foreign 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 in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSCPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.27%. The fund has one and three-year returns of 13.6% and 11.7%, respectively.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund seeks capital appreciation by investing at least 80% of its assets in companies that design, produce or distribute goods or services in the leisure industries. The fund invests in both domestic and foreign 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 in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.27%. The fund has three and five-year returns of 3.5% and 6.1%, respectively.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) fund invests the majority 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 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.
FSRPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.74%, which is below the category average of 1.27%. The fund has one and three-year returns of 22.4% and 17.1%, respectively.
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3 Funds to Make the Most of a Rebound in Retail Sales
Per the latest report from the U.S. Census Bureau, retail sales sprung back to life in the month of May. The metric surged 17.7% in the month, surpassing the consensus estimate of 8.2%. Such an increase follows record declines of 14.7% in April and 8.2% in March.
U.S. retailers benefited primarily from the reopening of the American economy after the COVID-19 lockdown which is touted to be the shortest yet deepest recession in America’s history.
Apart from economic reopening, what also supported retail sales last month was pent-up consumer demand stemming from having to stay at home to maintain social distancing. Furthermore, unemployment benefits and federal tax payments to families were also pivotal in supporting higher sales in the month.
However, on a year-over-year basis, the metric was down 6% from the same month in 2019, shedding light on the fact that the economy will take time to recover from the damage that the pandemic-related lockdown has inflicted on it.
Talking about the figures, auto-dealers witnessed a 44% surge in May sales. This pushed up overall sales as the auto sector typically contributes approximately 20% to total retail sales. Meanwhile, sales excluding automobiles also rose a record 12.4%.
Further, clothing stores and home-furnishing stores witnessed a surge in sales by as much as 188% and 90%, respectively. Meanwhile, stores that sell books, music, sporting goods and hobby items reported an increase in sales by 88%. Notably these three sectors were impacted badly in April.
Sales at gas stations increased 13% and receipts at bars and restaurants witnessed an uptick of 29% last month. Finally, Internet-based retailers reported an increase of 9% in sales in May.
3 Mutual Funds to Buy
We have selected three funds that can make the most of this uptick in retail sales. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-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 (FSCPX - Free Report) fund invests a large portion of its assets in securities of companies that manufacture and distribute consumer discretionary goods and services. The fund invests in both domestic and foreign 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 in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSCPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.27%. The fund has one and three-year returns of 13.6% and 11.7%, respectively.
Fidelity Select Leisure Portfolio (FDLSX - Free Report) fund seeks capital appreciation by investing at least 80% of its assets in companies that design, produce or distribute goods or services in the leisure industries. The fund invests in both domestic and foreign 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 in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.27%. The fund has three and five-year returns of 3.5% and 6.1%, respectively.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) fund invests the majority 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 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.
FSRPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.74%, which is below the category average of 1.27%. The fund has one and three-year returns of 22.4% and 17.1%, respectively.
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 >>