The ISM Services index hit its highest level of 59.8% in September 2017 since August 2005, when as per the Institute for Supply Management, the reading was 61.3%. In August 2017, service activity had grown 55.3%.
The September 2017 reading came in above economists’ expectations of a reading of 55.5%. A reading above 50 indicates expansion.
The service sector is burgeoning. So putting your money in mutual funds that invest in service-oriented companies such as financial service, healthcare and medical, and real estate entities would fetch outstanding returns.
Furthermore, business activity surged almost 4% in the month of September, posting growth for 98 months on the trot. The new orders index also increased to 63% in September from 57.1% in August. Also, the employment index grew to 56.8% in the month. Moreover, economic activity in the non-manufacturing sector surged for 93 straight months.
The recent carnage by hurricanes Harvey and Irma disrupted production and business activity in Texas and Florida, washing away swathes of land. However, things have sprung back to normal as reflected by the recent weekly initial jobless claims, which plummeted to 243,000 from last week — down 15,000 and the lowest level in as many as six weeks.
Economists commented that only a few Americans applied for unemployment benefits in this period as business resumed in Texas and Florida, with more people going back to work. This indicates broadly encouraging economic conditions.
The non-manufacturing sector exhibited strong growth despite hurricanes Harvey and Irma. This augurs well for the economy. Of the 17 non-manufacturing sectors that were surveyed, 14 depicted growth last month. Three industries that lagged were educational services, mining and agriculture, and forestry, fishing and hunting.
Non-manufacturing businesses that reported growth in September include finance & insurance, health care and real estate among others. Meanwhile, the economy seems to be in good shape. In its final assessment of GDP in Q2, the commerce department updated the GDP growth figure to 3.1%, reflecting a two-year high. What has also helped markets rally recently is undoubtedly President Trump’s new tax code.
In an announcement last month, the Trump administration unveiled new reforms in tax policies that effectively lower taxes on businesses and individuals. The proposal seeks to decrease the corporate tax rate from 35% to 20%. Moreover, pass-through business taxes, currently categorized under the individual tax code, would be slashed to 25%.
Here, we present to you four best-performing mutual funds with significant exposure to the U.S. stock markets. Moreover, these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). We expect these funds to provide stunning returns as service activity in the United Sates notched its record high in as many as 12 years.
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.
Moreover, these funds have marvellous third-quarter and year-to-date (YTD) returns and minimum initial investment is within $5000. Also, each of these funds has a low expense ratio. We have selected two best mutual funds from the financial service sector and one each from the healthcare and real estate sectors.
Putnam Global Financial (MUTF:PGFFX) seeks long-term appreciation of capital by investing in common stocks of both large and mid-sized companies across the globe. It is managed by Putnam Funds. The fund normally invests the lion’s share of its assets in securities of companies from the financial services sector.
PGFFX has YTD and three-year annualized returns of 16.1 and 8.2%, respectively. The fund has an expense ratio of 1.28% compared with the category average of 1.41%. It has a minimum initial investment of $0.
Rydex Financial Services Fund Class Investor (MUTF:RYFIX) seeks capital appreciation by investing in companies that are involved in the financial services sector. It is managed by Rydex Global Advisors. The fund invests substantially all of its assets in equity securities of financial services companies such as commercial banks, savings and loan associations, insurance companies and brokerage companies.
The fund may also engage in futures and options transactions, purchase ADRs and U.S. Government securities, and enter into repurchase agreements.
RYFIX has YTD and three-year annualized returns of 11.3% and almost 11%, respectively. The fund has an expense ratio of 1.38% compared with the category average of 1.41%. It has a minimum initial investment of $2,500.
Fidelity Select Health Care Portfolio (MUTF:FSPHX) seeks capital appreciation by and is managed by Fidelity Group. The fund normally invests its 80% of assets in common stocks of companies principally engaged in the design, manufacture, or sale of products or services used for or in connection with health care or medicine.
FSPHX has YTD and three-year annualized returns of 25.7% and 10.7%, respectively. The fund has an expense ratio of 0.73% compared with the category average of 1.29%. It has a minimum initial investment of $2,500.
Fidelity Advisor Real Estate Income Fund Class A (MUTF:FRINX) seeks current income and capital appreciation and is managed by Fidelity Group. The fund normally invests in a balanced portfolio of common stocks, U.S. and foreign government securities, and a variety of corporate fixed-income obligations.
The fund also invests 25% of its total assets in fixed-income, investment grade securities rated higher by Moody’s Investors Service, Inc. The fund may invest up to 30% of its total assets in foreign securities.
FRINX has YTD and three-year annualized returns of 7.5% and 7.8%, respectively. The fund has an expense ratio of 1.02% compared with the category average of 1.22%. It has a minimum initial investment of $2,500.
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