3 Best Mutual Funds to Buy as Industrial Production Picks Up Again

Sometimes finding the best mutual funds to buy can be difficult, but these are bound to rise soon

By , Zacks Investment Research

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Per the latest report by the Federal Reserve, industrial production rose for the fourth straight month in September. Gains were buoyed by steady increase in manufacturing and mining output.

Also, the Fed stated that Hurricane Florence only had a mild impact on the metric, reducing a meager 0.1 percentage point from the overall industrial production. Under such circumstances, investing in mutual funds having significant exposure to the manufacturing and industrial companies seems prudent, as some of these have become the best mutual funds to invest in today.

U.S. Industrial Production Grows for Fourth Straight Quarter

Industrial production in the United States increased 0.3% for the month of September and 5.1% year over year. This also marked its highest year-over-year increase in as many as eight years. The September reading also surpassed the consensus estimate of a 0.2% increase. Further, manufacturing output increased steadily by 0.2% in the month, marking its fourth straight monthly gain.

Steady industrial production indicates that the U.S. economy is in fine fettle. Moreover, manufacturing accounts for about 12% of the U.S. economy and any increase in the metric suggests that the economy is burgeoning.

Factors Supporting the Growth

Steady increase in production of automobiles and auto ancillary parts helped keep manufacturing activity afloat. This metric increased 1.7%, last month. Notably, manufacturing output excluding automobiles increased only 0.2% in June. For the record, manufacturing output gained 2.8% in the third quarter.

Mining output increased by 0.5% last month. This represents the sixth straight month of gains for the metric. Overall, industrial production increased 3.3% in the third quarter.

Three Best Mutual Funds to Buy Now

Three Best Mutual Funds to Buy Now
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Given such positives, we have highlighted three of the best mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (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 Industrials Fund (FCYIX)

Fidelity Select Industrials Fund (FCYIX) best mutual funds
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Fidelity Select Industrials Fund (MUTF:FCYIX) seeks capital appreciation. FCYIX normally invests a large portion of its assets in the common stock 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 16.6% over the three-year and 11.2% 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.

FCYIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.04%.

Fidelity Select Automotive Port (FSAVX)

Fidelity Select Automotive Port (FSAVX) best mutual funds
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Fidelity Select Automotive Port (MUTF:FSAVX) seeks capital appreciation. This fund invests the majority of its 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 6.1% over the three-year and 3.8% 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.

FSAVX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.96%, which is below the category average of 1.17%.

Fidelity Select Defense & Aerospace Portfolio (FSDAX)

Fidelity Select Defense & Aerospace Portfolio (FSDAX) best mutual funds
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Fidelity Select Defense & Aerospace Portfolio (MUTF:FSDAX) invests a huge portion of its assets in securities of companies involved primarily in the research, manufacture and sale of products and services as per the defense or aerospace industries. The fund seeks capital growth by investing in both U.S. and non-U.S. companies.

This Sector – Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 26.4% over the three-year and 17.2% 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.

FSDAX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.04%.

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