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2 Mutual Funds to Gain on an Uptick in Consumer Outlays
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The Consumer Discretionary sector has shown remarkable resilience and positive momentum. Recent economic data and spending patterns indicate this trend. The U.S. Census Bureau retail sales report reveals that retail sales exceeded expectations in July and increased 0.7% month over month, beating the consensus estimate of 0.4%.
The metric for June was revised upward from 0.2% to 0.3%. Core retail sales (excluding auto sales) in July increased 1% month over month, beating the consensus estimate of 0.4%.The metric for June was 0.2%.This indicates that consumers are still making purchases despite persistent inflationary pressures.
The Consumer Price Index for All Urban Consumers, as reported by the Bureau of Labor Statistics, experienced a 0.2% increase. This upward trajectory has remained steady. Both seasonally adjusted and non-seasonally adjusted figures show a 3.2% rise over the past year. Furthermore, excluding food and energy items, the index saw a comparable 0.2% growth, indicating a year-on-year increase of 4.7%.
The Department of Labor has reported that in July, the producer price index (PPI) increased by 0.3% compared to the previous month. This exceeded the consensus estimate of 0.2%. June data was revised downward and remained flat with May, contradicting an earlier report of a 0.1% increase. On a year-over-year basis, PPI rose by 0.8% in July.
Furthermore, the core PPI, which excludes volatile food, energy and trade services, experienced a 0.2% increase in July compared to the previous month. This marks its highest uptick since February. Year over year, the core PPI increased by 2.7% in July. These growth patterns highlight a sector that not only showcases resilience but also demonstrates its ability to navigate various economic conditions.
In addition, according to the New York Federal Reserve, the growing utilization of credit cards is evidenced by the surpassing of credit card balances reaching over $1 trillion in the second quarter of 2023. This data showcases a persistent desire for discretionary spending. This scenario underscores the compelling reasons to consider investing in mutual funds that have more exposure to the consumer discretionary sector.
We have, thus, chosen two such mutual funds that investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments within $5000, and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Fidelity Select Leisure & Entertainment (FDLSX - Free Report) aims to seek capital appreciation by investing most of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries.
Kevin Francfort has been the lead manager of FDLSX since Sep 7, 2022. Most of the fund's holdings were in companies like Mcdonald's (18%), Booking Holdings Inc (10.2%) and Hilton Worldwide Holdings (7.5%) as of May 31, 2023.
FDLSX's 3-year and 5-year returns are 21% and 12.7%, respectively. The annual expense ratio is 0.74% compared to the category average of 0.79%. FDLSX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) seeks capital appreciation by investing in common stocks of companies principally engaged in merchandising finished goods and services primarily to individual consumers.
Boris Shepov has been the lead manager of FSRPX since May 15, 2018. Most of the fund's holdings were in companies like Amazon.com, Inc. (27.3%), The Home Depot, Inc. (10.5%) and The TJX Companies, Inc. (6.7%) as of May 31, 2023.
FSRPX's 3-year and 5-year annualized returns are 5.9% and 9.6%, respectively. Its net expense ratio is 0.72% compared with the category average of 0.79%. FSRPX has a Zacks Mutual Fund Rank #2.
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2 Mutual Funds to Gain on an Uptick in Consumer Outlays
The Consumer Discretionary sector has shown remarkable resilience and positive momentum. Recent economic data and spending patterns indicate this trend. The U.S. Census Bureau retail sales report reveals that retail sales exceeded expectations in July and increased 0.7% month over month, beating the consensus estimate of 0.4%.
The metric for June was revised upward from 0.2% to 0.3%. Core retail sales (excluding auto sales) in July increased 1% month over month, beating the consensus estimate of 0.4%.The metric for June was 0.2%.This indicates that consumers are still making purchases despite persistent inflationary pressures.
The Consumer Price Index for All Urban Consumers, as reported by the Bureau of Labor Statistics, experienced a 0.2% increase. This upward trajectory has remained steady. Both seasonally adjusted and non-seasonally adjusted figures show a 3.2% rise over the past year. Furthermore, excluding food and energy items, the index saw a comparable 0.2% growth, indicating a year-on-year increase of 4.7%.
The Department of Labor has reported that in July, the producer price index (PPI) increased by 0.3% compared to the previous month. This exceeded the consensus estimate of 0.2%. June data was revised downward and remained flat with May, contradicting an earlier report of a 0.1% increase. On a year-over-year basis, PPI rose by 0.8% in July.
Furthermore, the core PPI, which excludes volatile food, energy and trade services, experienced a 0.2% increase in July compared to the previous month. This marks its highest uptick since February. Year over year, the core PPI increased by 2.7% in July. These growth patterns highlight a sector that not only showcases resilience but also demonstrates its ability to navigate various economic conditions.
In addition, according to the New York Federal Reserve, the growing utilization of credit cards is evidenced by the surpassing of credit card balances reaching over $1 trillion in the second quarter of 2023. This data showcases a persistent desire for discretionary spending. This scenario underscores the compelling reasons to consider investing in mutual funds that have more exposure to the consumer discretionary sector.
Also, mutual funds, in general, diversify one’s portfolio without several commission charges that are mainly associated with stock purchases and trim transaction costs (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have, thus, chosen two such mutual funds that investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments within $5000, and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Fidelity Select Leisure & Entertainment (FDLSX - Free Report) aims to seek capital appreciation by investing most of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries.
Kevin Francfort has been the lead manager of FDLSX since Sep 7, 2022. Most of the fund's holdings were in companies like Mcdonald's (18%), Booking Holdings Inc (10.2%) and Hilton Worldwide Holdings (7.5%) as of May 31, 2023.
FDLSX's 3-year and 5-year returns are 21% and 12.7%, respectively. The annual expense ratio is 0.74% compared to the category average of 0.79%. FDLSX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Retailing Portfolio (FSRPX - Free Report) seeks capital appreciation by investing in common stocks of companies principally engaged in merchandising finished goods and services primarily to individual consumers.
Boris Shepov has been the lead manager of FSRPX since May 15, 2018. Most of the fund's holdings were in companies like Amazon.com, Inc. (27.3%), The Home Depot, Inc. (10.5%) and The TJX Companies, Inc. (6.7%) as of May 31, 2023.
FSRPX's 3-year and 5-year annualized returns are 5.9% and 9.6%, respectively. Its net expense ratio is 0.72% compared with the category average of 0.79%. FSRPX has a Zacks Mutual Fund Rank #2.
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 >>