3 solid funds to buy when retail sales increase

0

Jhe retail sector is rebounding strongly after taking a hit at the height of the pandemic, followed by uneven sales over the past year. It’s been a good year so far, with sales picking up in the three months, which is a good sign for retailers finally breathing easy.

Although rising costs have been a concern, people are still willing to spend, thanks to higher personal incomes and expenses. Thus, funds like Fidelity Select Consumer Discretionary Portfolio FSCPX, Fidelity Select Building and Housing Portfolio FSHOX andFidelity Select Retail Portfolio FSRPX, should benefit from it in the short term.

Soaring retail sales

Retail sales excluding vehicle sales rose 8.4% year-over-year in March, according to the latest Mastercard SpendingPulse report. In addition, sales increased by 18% compared to the pre-pandemic period. The report also mentions that sales in March were driven by the service industry.

That saw air travel soar 44.8% year-on-year in March, while restaurant sales and hotel bookings jumped 19.1%. This indicates that consumer spending on services is picking up again, which is benefiting retail trade.

The pandemic has hit the retail sector hard, which has seen people cut spending on services. However, offices, industries and schools are reopening and people are once again spending more on services.

The jump in spending on services did not hamper spending on goods. Clothing and luxury goods sales increased by 16% and 27.1% respectively. Department store sales jumped 14%.

In-store sales have also increased as people feel more comfortable leaving their homes. In-store sales rose 9.4% in March from pre-pandemic levels.

The jump comes despite rising commodity prices, which saw inflation figures soar to a 41-year high. Even then, people are not shy about spending, which has boosted retail sales. One of the main reasons behind this is the increase in income and expenditure of individuals. Personal income rose 0.5% in February, while spending rose 0.2%.

3 best choices

So we’ve selected three mutual funds with significant exposure to the retail sector that carry a Zacks Mutual Fund Rank of #1 (Strong Buy) or #2 (Buy) and are poised to take advantage of the above factors. In addition, these funds have encouraging returns over three and five years. Also, the minimum initial investment is less than $5,000.

We expect these funds to outperform their peers going forward. Remember, the purpose of the Zacks Mutual Fund Rankings is to guide investors in identifying potential winners and losers. Unlike most fund rating systems, Zacks Mutual Fund Rankings focus not only 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 portfolio diversification without multiple commission fees associated with stock purchases are the main reason to invest money in mutual funds (learn more: Mutual Funds: pros, cons and how they make money for investors).

Fidelity Select Consumer Discretionary Portfolio fund seeks capital appreciation. FSCPX invests the majority of its assets in securities of companies generally engaged in the production, distribution and marketing of consumer discretionary products. Fidelity Select Consumer Discretionary Portfolio fund invests in US and non-US issuers.

The Fidelity Select Consumer Discretionary Portfolio has had a track record of positive total returns for more than 10 years. Specifically, FSCPX has returned 16.3% and 15.5% over the past three and five years, respectively. To see how this fund performed against its category and other mutual funds ranked 1 and 2, please click here.

FSCPX has a Zacks mutual fund rank of No. 2 and an annual expense ratio of 0.76% compared to the category average of 0.79%.

Fidelity Select Retail Portfolio fund seeks capital appreciation. FSRPX invests a large portion of its assets in common stocks of companies engaged in the marketing of finished products and services, primarily to individual consumers.

The Fidelity Select Retail Portfolio has had a track record of positive total returns for more than 10 years. Specifically, FSRPX has returned nearly 17.3% and nearly 17.9% over the past three and five years, respectively. To see how this fund performed in its category, and other mutual funds ranked 1 and 2, please click here.

FSRPX has a #1 Zacks mutual fund ranking and an annual expense ratio of 0.73%, which is below the category average of 0.79%.

Fidelity Select Building and Housing Portfolio fund seeks capital growth. FSHOX invests in common stock and most of its assets in the design and construction of residential, commercial and industrial facilities, etc.

Fidelity Select Construction & Housing Portfolio has a track record of positive total returns for more than 10 years. Specifically, FSHOX has returned 23.8% and 17.5% over the past three and five years, respectively. To see how this fund performed in its category, and other mutual funds ranked 1 and 2, please click here.

FSHOX has a #1 Zacks mutual fund ranking and an annual expense ratio of 0.78%, which is below the category average of 0.79%.

Want to get key mutual fund information straight to your inbox?

Zacks’ free fund newsletter will update you weekly on top news and analysis, as well as the top performing mutual funds. Get it for free >>

Just Released: Zacks Top 10 Stocks for 2022

In addition to the investment ideas discussed above, would you like to know our top 10 picks for all of 2022?

From its creation in 2012 to 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% vs. +348.7% for the S&P 500. Now our research director has combed through 4,000 companies covered by the Zacks Ranking and selected the top 10 tickers to buy and keep. Don’t miss your chance to enter…because the sooner you do, the more chances you have of winning.

See actions now >>

Click to get this free report

Get Your Free (FSRPX): Fund Analysis Report

Get Your Free (FSCPX): Fund Analysis Report

Get Your Free (FSHOX): Fund Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Share.

Comments are closed.