5 Mutual Funds to Buy as U.S. Industrial Production Surges

By Zacks Equity Research, Zacks Investment Research

http://bit.ly/2Ds7U13

On Jan 17, the Federal Reserve stated that industrial production in the United States for December had surged, buoyed by an increase in mining and utilities production. Unusually cold weather conditions led to increased demand for heating, which also gave a boost to the industrial activity in the country.

Moreover, improving global economic conditions and strengthening U.S. exports have positively impacted industrial activity. This goes without saying that the implementation of the GOP tax reform would improve domestic industrial production further. Such favorable conditions call for investing in a portfolio of mutual funds from this space.

U.S. Industrial Production Gains Steam

Per the report by the Federal Reserve, Industrial Production in the United States rose by 0.9% in December. The consensus estimate for the period was a meager increase of 0.4%. Economists have confirmed that such a rise in industrial production was boosted by increased demand for heating as extremely cold weather gripped parts of the country.

Mining production rose 1.6% in December after oil and gas drilling activity resumed in the country. This contributed to most of the gains for industrial production. Further, a rise in utilities production by 5.6% also increased industrial activity.

The Fed reported that higher demand for utilities resulted in an increase in consumer spending, which led to higher economic growth in the fourth quarter. Such an event also boosted industrial activity in the United States. In 2017, industrial output increased 1.8%, marking the biggest rise since 2014.

Meanwhile, analysts are of the view that the $1.5 trillion tax reform will lead industrial production higher in 2018. The sector has also benefited from improving global economic conditions and a weakening dollar that resulted in strengthening exports.

4 Best Funds to Buy Now

Given such positives, we have highlighted four industrial mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). 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.

Mutual Funds to Buy as U.S. Industrial Production Surges: Fidelity Select Industrials Portfolio (FCYIX)

Fidelity Select Industrials Portfolio (MUTF:FCYIX) seeks capital appreciation. FCYIX normally invests at least 80% of its assets in common stocks of companies principally engaged in the research, development, manufacture, distribution, supply, or sale of materials, equipment, products, or services related to cyclical industries.

This Sector – Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 10.8% over the three-year and 15% 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.

The Fidelity Select Industrials Fund, as of the last filing, allocates their assets in top two major groups, namely Large Value and High Yield Bond.

FCYIX has a Zacks Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.27%. The fund has three and one-year returns of 13.7% and 25.1%, respectively.

Mutual Funds to Buy as U.S. Industrial Production Surges: Fidelity Select Industrial Equipment Portfolio (FSCGX)

Fidelity Select Industrial Equipment Portfolio (MUTF:FSCGX) seeks capital appreciation. The fund normally invests the lion’s share of its assets in common stocks of companies involved in the manufacture, distribution and service of products and equipment for the industrial sector.

This Sector – Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 11.4% over the three-year benchmark and 13% over the five-year benchmark. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The Fidelity Select Industrial Equip Port, as of the last filing, allocates its fund in top two major groups; Large Value and Small Growth.

FSCGX has a Zacks Rank #2 and an annual expense ratio of 0.83%, which is below the category average of 1.27%. The fund has three and one-year returns of 15.2% and 24.7%, respectively.

Mutual Funds to Buy as U.S. Industrial Production Surges: Fidelity Select Automotive Portfolio (FSAVX)

Fidelity Select Automotive Portfolio (MUTF:FSAVX) seeks capital appreciation. This fund invests the majority of assets in common stocks of companies involved in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires, and related services.

This Sector – Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 5.4% over the three-year and 12% 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.

The Fidelity Select Automotive Port Fund, as of the last filing, allocates their fund in top two major groups, namely Large Value and High Yield Bond.

FSAVX has a Zacks Rank #1 and an annual expense ratio of 0.95%, which is below the category average of 1.35%. The fund has three and one-year returns of 9.4% and 28.7%, respectively.

Mutual Funds to Buy as U.S. Industrial Production Surges: Fidelity Select Chemicals Portfolio (FSCHX)

Fidelity Select Chemicals Portfolio (MUTF:FSCHX) seeks capital appreciation. The fund normally invests at least 80% of its assets in common stocks of companies principally engaged in the research, development, manufacture, or marketing of products or services related to the chemical process industries.

This Sector – Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 13.8% over the three-year and 14.9% 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.

The Fidelity Select Chemicals Portfolio Fund, as of the last filing, allocates their fund in top two major groups, namely Large Value and Foreign Stock.

FSCHX has a Zacks Rank #1 and an annual expense ratio of 0.79%, which is below the category average of 1.40%. The fund has three and one-year returns of 15.8% and 34.2%, respectively.

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