Markets

3 Funds to Buy as Consumer Confidence Remains Robust

The measure of confidence that American citizens vest in the U.S. economy, also known as consumer confidence, rose in the month of July after falling in June. Much of the surge has been attributed to strong employment prospects and upbeat economic conditions. U.S. GDP expanded at its fastest pace in the last four years.

High consumer confidence strengthens spending in luxury as well as leisure goods, including swank apartments, new appliances and cars. Under such encouraging conditions, it makes buying mutual funds that invest in leisure, discretionary and transportation companies prudent.

Consumer Confidence Near 18-Year High

On Jul 31, the Conference Board reported a surge in consumer confidence among Americans for the month of June. The report indicated a steady rebound in the level of confidence in the economy that a consumer would instill. It also remained near its 18-year high level.

For May, the Conference Board's measure of consumer confidence index is pegged at 127.4 compared with June's revised reading of 127.1. The reading also surpassed the consensus estimate of 126.5. The Present Situation index, reflecting current economic conditions surged to 165.9 from 161.7 in June.

US GDP Growth Hits its Fastest Pace Since 2014

According to the Department of Commerce's first estimate, U.S. GDP increased at a 4.1% pace in the second quarter. This is the sharpest pace of growth experienced since the 4.9% pace registered in the third quarter of 2014. Additionally, the first quarter's figure was revised upward from 2% to 2.2%.

Hailing the latest report from the Department of Commerce, President Trump said the economy had just completed "an economic turnaround of historic proportions."

Consumer spending, which makes up nearly 70% of U.S. GDP, increased at a 4% pace during this period. This is the sharpest pace of growth witnessed in the last three and a half years. Further, it comes after the sluggish 0.5% pace registered during the January-March quarter. ( Read More )

3 Best Funds to Buy Now

Given such circumstances, we have highlighted four mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and one-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 Utilities Portfolio FSUTX invests the lion's share of its assets in common stocks of companies primarily involved in the utility sector, and companies that derive the major portion of its revenues from operations related to this sector.

This Sector - Utilities product has a history of positive total returns for over 10 years. Specifically, the fund has returned 12.5% over the three-year and 11.4% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here .

FSUTXhas an annual expense ratio of 0.77%, which is below the category average of 1.10%.

Fidelity Select Leisure Fund FDLSX seeks capital appreciation. FDLSX normally invests at least 80% of assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries. The fund offers dividends and capital gains twice a year in April and December.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 9.1% over the three-year and 12.8% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here .

FDLSXhas an annual expense ratio of 0.77%, which is below the category average of 1.17%.

Fidelity Select Consumer Discretionary Portfolio FundFSCPX invests in large-blend companies. The objective of FSCPX is to seek capital appreciation. FSCPX normally invests at least 80% of its assets in common stocks of companies principally engaged in the manufacture and distribution of goods and services to both domestic and international consumers.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 11.9% and 14%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here .

FSCPX has an annual expense ratio of 0.77%, which is below the category average of 1.17%.

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


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

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