Which Retail Fund to Buy: FSRPX or FSCPX?

The continued rise in the number of new coronavirus cases in the country has again put the spotlight on retailers that offer customers an easy way to shop. Of course, this means that retailers offering ecommerce services and doorstep delivery are set to gain further.

U.S. Online Sales to Rise Ahead

According to an eMarketer report, ecommerce in the country is expected to grow 18% this year following 14.9% gain in 2019, which indicates toward a gradual shift to online shopping trends because of the pandemic. A string of factors are behind this digital shift.

First, ecommerce sales have been pushed by a rise in click and collect. Among these, curbside pickup has allowed American consumers to rely on immediate purchases while reducing human contact. eMarketer anticipates U.S. click-and-collect ecommerce sales to increase to $58.52 billion, which is up 60.4% from the initial forecast of 38.6%.

Second, the growth forecast also relies on a sizeable increase in the number of digital buyers and the average spending by each customer. This indicates the entry of new online shoppers this year because of the pandemic.

What makes this shift even more prominent and permanent is because of the customers’ reliability on retail giants such as Amazon, Walmart and other similar bigwigs. This is why online shopping habits could be here to stay despite the domestic economy reopening completely ahead.

Therefore one may consider investing in mutual funds that invest in retailers. But choosing the right mutual fund can be difficult, which is why we have compared two of the best retail mutual funds for you below. Both of these funds carry a Zacks Mutual Fund Rank #2 (Buy).

Fidelity Select Retailing Portfolio FSRPX

The fund aims for capital growth. It invests the majority of its assets in securities of companies primarily engaged in merchandising finished goods and services to individual consumers. The non-diversified fund invests mostly in common stocks. FSRPX invests in U.S. and non-U.S. issuers alike.

This Sector-Other product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 19.3% over the 3-year and 16.5% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here. 

The Fidelity Select Retailing Portfolio fund, as of the last filing, allocates its assets in top two major groups — Large Growth and Foreign Bond. Further, as of the last filing, Amazon, Home Depot and Lowe’s were the top holdings for FSRPX.

FSRPX was incepted in December 1985 and is managed by Fidelity. The fund carries an expense ratio of 0.74% and requires a minimal initial investment of $0.

Fidelity Select Consumer Discretionary Portfolio FSCPX

FSCPX aims for capital appreciation. The fund invests the majority of its assets in securities of companies mostly engaged in the manufacture and distribution of consumer discretionary products and services. It invests in domestic and foreign issuers alike. FSCPX is a non-diversified fund that primarily invests in common stocks of companies.

This Sector-Other product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 13.3% over the 3-year and 10.6% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here. 

The Fidelity Select Consumer Discretionary Portfolio fund, as of the last filing, allocates its assets in top two major groups — Large Growth and Foreign Bond. Further, as of the last filing, Amazon, Home Depot and McDonald’s were the top holdings for FSCPX.

FSCPX was incepted in June 1990 and is managed by Fidelity. The fund carries an expense ratio of 0.76% and requires a minimal initial investment of $0.

To Conclude

While both FSRPX and FSCPX are recommended buys, upon having a closer look, we find that the former clearly beats the latter in terms of returns and expense ratio. In addition, the former has less risk associated with it. FSRPX has a beta of 1.17, which is lesser than FSCPX’s beta of 1.24. Therefore, FSRPX is clearly the right investment choice.

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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.