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4 Winning Funds From US Private Sector Job Additions

Zacks Equity Research

Job growth in August was less than expected, owing to the ongoing trade conflict between the United States and China. However, nonfarm payrolls were largely pushed by the temporary hiring of Census workers and newly opened jobs across many private sectors such as healthcare and financial services. Therefore, investing in mutual funds from these growing sectors could help investors rope in gains.

U.S. Job Market is Robust

Per the Labor department, total nonfarm payroll employment in August increased by 130,000. The major factor behind this rise was the mass recruitment of temporary workers for the 2020 Census and somewhat broad-based new job additions across business services, healthcare, financial services and social assistance. 

In fact, according to a Forbes report, a sizeable number of recruiters in the United States believe that the country’s job market is rather robust. According to them, corporate demand is more than the number of qualified candidates. In addition, with a low unemployment rate, companies are having a hard time finding candidates with the right experience and skills.

August’s Top-Performing Sectors

To be specific, August’s job gains are largely attributed to the professional and business services sector, which gained 37,000 new jobs. The healthcare sector also added an impressive 24,000 jobs, with new roles in ambulatory health care services and in hospitals.

Financial services was another sector to add notable new positions in August, with as many as 15,000 new jobs in insurance carriers and related activities. Finally, social assistance created 13,000 new jobs. The sector had added an impressive 100,000 jobs in the last six months.

Our Choices

We have selected mutual funds from the sectors mentioned above. After all, job additions in such sectors mean that they are definitely on an expansionary mode.

These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have an encouraging year-to-date return. Additionally, the minimum initial investment is within $5,000.

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).

Invesco Health Care Fund Class Y GGHYX aims for capital growth over a long period of time. The fund invests the majority of its assets in securities of healthcare companies and those that operate in healthcare-related industries. The fund invests across all market capitalizations. The fund carries a Zacks Mutual Fund Rank #1.

This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

GGHYX has an annual expense ratio of 0.85%, which is below the category average of 1.23%. The fund has returned 12.9% on a year-to-date basis. It requires a minimum initial investment of $1000.

Fidelity Select Pharmaceuticals Portfolio FPHAX fund seeks capital growth. The fund invests the majority of its assets in securities of companies that are engaged in the research, development, manufacture and/or distribution of pharmaceuticals. It carries a Zacks Mutual Fund Rank #2.

This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FPHAX has an annual expense ratio of 0.80%, which is below the category average of 1.23%. The fund has returned 11.8% on a year-to-date basis. The fund requires no minimum initial investment.

T. Rowe Price Financial Services Fund PRISX aims for capital appreciation and a decent level of income. The fund invests the majority of its assets in securities of financial services companies and those related to or operating in the financial services industry. It carries a Zacks Mutual Fund Rank #2.

This Zacks sector – Finance product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRISX has an annual expense ratio of 0.87%, which is below the category average of 1.43%. It has returned 17.6% on a year-to-date basis. The fund requires a minimum initial investment of $2500.

Fidelity Select Banking Portfolio FSRBX aims for capital growth. The fund invests the majority of its assets in securities of companies engaged in banking. The fund mostly invests in common stocks and carries a Zacks Mutual Fund Rank #2.

This Zacks sector – Finance product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRBX has an annual expense ratio of 0.77%, which is below the category average of 1.43%. The fund has returned 13.3% on a year-to-date basis and requires no minimum initial investment.

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