Invest in these 3 funds as retail sales rebound in August – September 20, 2021
Americans continue to splurge despite the spread of the Delta variant in August, pushing retail sales up 0.7%, after a revised downward 1.8% drop in July. The US Census Bureau reported on September 16 that retail and food service sales are now 15% higher than the same time last year.
Clothing and clothing accessories stores saw a 38.8% increase in sales, with sales increasing in almost all major retail categories. In fact, retail sales were much stronger in August, up 1.8%, excluding auto sales. A shortage of new cars and trucks due to the scarcity of chips continues to weigh on the market, affecting sales at car dealerships.
Meanwhile, high inflation continues to disrupt consumers, cutting back on their current spending compared to the spring. However, Americans are spending comfortably on services they avoided during the pandemic, such as restaurant meals, hotel rentals, movie and theater tickets, plane tickets, etc., compared to the period of last year. Although the increase in new coronavirus cases has slowed demand for the aforementioned services, and restaurant sales were flat over the past month.
Sales at grocery stores, home centers, gas stations and home furnishings stores continued to increase over the past month, while sales at big box electronics retailers, particularly those selling household items. recreation and sports equipment, have fallen.
August retail sales not only exceeded the consensus estimate of a 0.9% drop, but also underscored that Americans are willing to spend and have an appetite for the big budget vacations as well as the new cars and trucks. In addition, the University of Michigan announced on September 17 that its preliminary reading of the Consumer Confidence Index rebounded to 71 in September, after falling sharply by almost 9 points in August.
As the holiday season approaches, Americans are expected to continue to spend heavily, especially on clothing, electronics, and jewelry. By Mastercard SpendingPulse forecast, holiday retail sales are forecast to increase 7.4% from the previous year. Bain and Deloitte also forecast sales growth of between 7% and 9%.
Big brands like Walmart have already started hiring material handlers and lift drivers for the holiday season and beyond, and plan to hire 20,000 supply chain workers. Home Depot reported the sale of Halloween decorations, which launched earlier this year. This signals an increase in sales of Christmas decorations this year.
3 fund choices
Given the rebound in retail sales in August, we are optimistic that the trend will continue for the rest of the year, especially during the holiday season. Therefore, we have shortlisted three mutual funds that are poised to grow and have a Zacks # 1 (strong buy) or 2 (buy) mutual fund rank. In addition, these funds have encouraging returns over one and three years. In addition, the minimum initial investment is $ 5,000.
We expect these funds to outperform their peers in the future. Remember, the goal of Zacks’ Mutual Fund Rankings is to guide investors in identifying potential winners and losers. Unlike most fund rating systems, Zacks’ mutual fund ranking does not focus only on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? The low transaction costs and portfolio diversification without multiple commission fees associated with stock purchases are the main reasons for investing money in mutual funds (learn more: Mutual funds: advantages, disadvantages and how they make money for investors).
Fidelity Select Retail Portfolio (FSRPX – Free Report) targets capital appreciation. This non-diversified fund invests a large portion of its assets in common stocks of companies engaged in the marketing of finished products and services, primarily to individual consumers.
This Zacks Sector-Other product has a history of positive total returns for over 10 years. Specifically, FSRPX has returned almost 21% and almost 23% in the past three and five years, respectively. To see how this fund has performed against its category and other ranked 1 and 2 mutual funds, please click here.
FSRPX has a Zacks mutual fund ranking of # 1 and an annual expense ratio of 0.73%, which is below the category average of 0.79%.
Fidelity Select Loisirs Portfolio (FDLSX – Free Report) targets capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies, primarily engaged in the design, production or distribution of goods or services in the leisure industries.
This Zacks Sector-Other product has a history of positive total returns for over 10 years. Specifically, FDLSX has a three- and five-year return of 16.6% and 16.5%, respectively. To see how this fund has performed against its category and other ranked 1 and 2 mutual funds, please click here.
FDLSX has a Zacks Mutual Fund Rank # 1 and an annual expense ratio of 0.77%, which is below the category average of 0.79%.
Fidelity Select Commodity Portfolio (FDFAX – Free Report) targets capital growth. It invests the majority of its assets in securities of companies whose main activity is the manufacture, marketing or distribution of everyday consumer products. The undiversified fund invests in both US and non-US issuers.
This Zacks – Other Product segment has a history of positive total returns for over 10 years. Specifically, FDFAX has returned 12.7% and 7.6% over the past three and five years, respectively. To see how this fund has performed against its category and other ranked 1 and 2 mutual funds, please click here.
FDFAX has a Zacks Mutual Fund Rank # 2 and an annual expense ratio of 0.75% compared to the category average of 0.76%.
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