Consumer Confidence Hits 18-Year High: 3 Fidelity Fund Picks

By Zacks Equity Research, Zacks Investment Research

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The measure of confidence that U.S. citizens vest in the domestic economy, also known as consumer confidence, rose in the month of August to its highest settlement in the last 18 years. Most of the surge has been attributed to strong employment prospects, high wages and upbeat economic conditions. Notably, U.S. GDP logged its best growth in spring in the last four years.

High consumer confidence encourages 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 Highest Since 1990s

On Aug 28, the Conference Board reported a surge in consumer confidence among Americans for the month of August. The index rose to 133.4 in August, marking an uptick from 127.9 in July. The index scaled its highest level since October 2000, surpassing 130 in February, which was also its post-recession high.

Additionally, an average American’s confidence in the present situations improved from 166.1 last month to 172.2 this month, the highest level since 2000. The future expectations index also increased from 102.4 to 107.6.

U.S. GDP Growth Fastest Since 2014

According to the Department of Commerce’s second estimate, U.S. GDP increased at a 4.2% pace in the second quarter, reflecting an upward revision from 4.1% initially thought of. This is the sharpest pace of growth experienced since the 4.9% pace registered in the third quarter of 2014. Such developments also indicate that the economy is on track to achieve an annual growth of 3%, which President Trump had targeted. Additionally, for the first half of 2018, the U.S. economy expanded at 3.2%.

Strength in software investment and a reduction in import bill propelled the economic growth in the second quarter. This offset a minor downward revision to consumer spending.

3 Best Funds to Buy Now

Given such circumstances, we have highlighted four Fidelity funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from such factors. Moreover, these Fidelity funds have encouraging three and five-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 Fidelity 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.

Consumer Confidence Hits 18-Year High: Fidelity Select Utilities Portfolio (FSUTX)

Fidelity Select Utilities Portfolio (MUTF: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 11.5% over the three-year and 10.6% over the five-year benchmarks.

FSUTX has an annual expense ratio of 0.77%, which is below the category average of 1.09%.

Consumer Confidence Hits 18-Year High: Fidelity Select Leisure Portfolio (FDLSX)

Fidelity Select Leisure Portfolio (MUTF:FDLSX) seeks capital appreciation. FDLSX normally invests at least 80% of its 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 7.9% over the three-year and 12.3% over the five-year benchmarks.

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

Consumer Confidence Hits 18-Year High: Fidelity Select Consumer Discretionary Portfolio (FSCPX)

Fidelity Select Consumer Discretionary Portfolio (MUTF:FSCPX) 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 11.2% and 13.2%, respectively.

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

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