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US Consumer Confidence Jumps to 14-Month High: 3 Fund Picks

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·4 min read
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On Apr 27, the Conference Board reported that the index of consumer confidence climbed to 121.7 in April, an 11.7% jump from the previous month’s revised figure of 109. A new round of stimulus and a rapid vaccination drive helped boost consumer confidence and will continue to push toward healthy economic recovery.

Though consumer confidence hasn’t returned to pre-pandemic levels, this month’s jump put it to a 14-month high, i.e., the highest since February 2020. The expectation for the same was a jump to 112.5. Another gauge that measures how Americans view of the next six months rose slightly to 109.8 from 108.3 in March but still marked the highest level in almost two years.

Now, what gave consumers the boost in confidence? The rapid vaccination drive has helped the economy regain momentum this year. State governments have eased restrictions, which allowed several businesses to restart hiring, further boosting confidence in the possibility of return to normalcy. Additionally, a massive federal stimulus in March that raised unemployment benefits and included $1,400 checks for most Americans played its part in boosting confidence.

With new cases continuing to fall, consumers’ assessment of the current conditions and the short-term outlook have increased, raising hopes of faster-than-expected economic recovery. In fact, the survey states that the percentage of consumers claiming business conditions are good increased from 18.3% to 23.3% this month. Rise in consumer confidence will boost the spending on luxury, leisure goods, new appliances and cars. Retail sales jumped 9.8% in March, pointing toward the rising economic momentum.

3 Mutual Fund Picks

Given such a positive outlook, we have shortlisted three funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to grow. In addition, the minimum initial investment for these funds is within $5,000.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify the potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on the fund’s past performance but also on its likely future success.

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 the reasons for parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages and How They Make Investors Money).

Fidelity Select Leisure Portfolio FDLSX fund aims at capital appreciation. This non-diversified fund normally invests majority of assets in the common stocks of companies that are mostly 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 more than 10 years. Specifically, FDLSX has returned 15.7% and 15.4% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 0.80%.

Fidelity Select Consumer Staples Portfolio FDFAX fund aims for capital growth. It invests majority of assets in securities of companies primarily engaged in manufacturing, marketing or distribution of consumer staples products. The non-diversified fund invests in both U.S. and non-U.S. issuers.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 10.7% and 7.1% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDFAX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.75% versus the category average of 0.77%.

Fidelity Select Retailing Portfolio FSRPX fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.

This Sector - Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned 25.2% and 22.2% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.74%, which is below the category average of 0.80%.

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