Buy these 3 funds as retail sales continue to soar

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JCommercial space is quickly recovering after slowing in the second half. After posting a solid jump in January, retail sales increased again in February, indicating that the economy is on track for a sustained recovery.

According to the latest report from Mastercard SpendingPulse, the jump in retail sales in February occurred despite rising commodity prices. This shows that people are not shy about spending despite rising prices. Additionally, sales increased across all categories, driven by e-commerce. Thus, funds like Fidelity Select Retail Portfolio SSPX, Fidelity Select Building and Housing Portfolio FSHOX andFidelity Select Consumer Staples Portfolio FDFAX should benefit from this in the short term.

Rise in retail sales

According to the latest Mastercard SpendingPulse report, retail sales were up 8.7% year-over-year in February and 17.3% from pre-pandemic levels in 2019. Store sales were up 10% year-over-year in February.

Sales increased almost in all sections. As more people finally start heading to the office, back-to-office apparel sales have jumped 37.6% year-on-year. This was mainly because most people were working from home at this time last year. In addition, department store sales increased 26.3% year over year.

E-commerce, which played a vital role in boosting retail sales during the height of the pandemic, has now become a preferred choice for most. This saw online retail sales rise 4.4% year-on-year in February and 85.9% from pre-pandemic levels.

People’s consumption habits have changed as a result of the pandemic, causing them to buy more products than services. However, once the economy started to recover, consumers started spending on services, reversing the trend. Restaurant sales were up 39.4% year over year and 24.2% from pre-pandemic levels.

The jump in retail sales in February comes after the release of strong numbers in January. The surge in sales comes despite rising prices and the supply chain crisis. It also proves that people are ready to spend now and in the coming months as well. Additionally, home savings hit a new high in 2021, indicating that consumer spending will pick up in the coming months.

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? Reducing transaction costs and diversifying the portfolio without multiple commission fees associated with stock purchases are the primary reason for investing money in mutual funds (read more: Mutual Funds : advantages, disadvantages and how they make money for investors).

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 20.9% and nearly 20% 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. As of 01/31/2022, Fidelity Select Construction & Housing Portfolio invests 43.2% of its assets in the retail sector. FSHOX has an investment of 18% of its assets in Home Depot, Inc. (HD) and 17% in Lowe’s Companies, Inc. (LOW), as of 11/30/2021.

The Fidelity Select Construction and Housing portfolio has had a track record of positive total returns for more than 10 years. Specifically, FSHOX has returned nearly 31.7% and nearly 21.3% 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%.

Fidelity Select Consumer Staples Portfolio fund seeks capital growth. FDFAX invests the majority of its assets in the securities of companies whose principal activity is the manufacture, marketing or distribution of basic consumer products. The Fidelity Select Consumer Staples Portfolio fund invests in US and non-US issuers.

The Fidelity Select Consumer Staples Portfolio has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 15.6% and 9% 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.

FDFAX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.75% compared to the category average of 0.76%.

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