4 Mutual Funds to Gain From Pandemic-Led Lifestyle Changes

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The coronavirus pandemic has brought about several lifestyle changes. From promoting indoor activities to improved sleep patterns and extended hours of family time, many of these lifestyle changes have deeply impacted the business landscape and definitely changed the way we think, work, study, communicate and spend money.

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Last year, at the onset of the pandemic, the biggest concerns of healthcare authorities and the general populous were money or currency notes. Paper bill that goes through hands of hundreds everyday was also a carrier of the virus, hence, several had rapidly adopted contactless payment channels. Banks and other financial services tied up with online retailers to speed up transactions and also used radio-frequency identification (RFID) technology and near-field communication. Consumers can tap the payment card near a point-of-sale terminal equipped with the RFID technology and make payment without having to touch the device or type in the pin code. Several payment applications also allowed customers to directly shop through mobile applications and provided benefits like cashback and reward points.

Rapid digital transformation or digitization has enabled organizations to respond and thrive during the pandemic. Companies are drastically opting for professional service robots and shifting office work to the cloud, enabling employees to work with ease from their homes. In the manufacturing backdrop, shortage of skilled labor and fear of infection spreading have restricted the number of laborers on the work floor. Owners are increasing automation, bringing in industrial arms or collaborative robots to work in harmony with the available workforce, with precision and safety.

Digital transformation due to the pandemic has also played its part in altering the household lifestyle. Cleaning bots and smart home devices have become an integral part of day-to-day lives now. This year Consumer Electronic Show (CES) 2021 witnessed some impressive robots, the highlights of this virtual show were smart-home appliances, brain-training headsets, recycling bots, remote teaching devices, health monitoring devices and more.

The benefits of a smart home and remote working coupled with the threat of staying in densely-populated areas have forced people to opt for homes in the suburbs and low-density regions. There has been a massive migration away from major cities and with mortgage rates at all-time lows, demand for single-family home bumped up last year and will continue to grow this year too. The 30-year fixed mortgage rate slipped to 2.97% for the week ending Apr 22. In March, new home sales jumped 20.7% from the previous months, the highest level since August 2006 and 66.8% higher on a year-over-year basis.

4 Funds to Pick

The pandemic has brought in several lifestyle changes and is also impacting investing decisions. Here are four mutual funds poised to grow from such changes. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to grow. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.

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 Technology Portfolio FSPTX fund aims for capital appreciation. It invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, this non-diversified has returned 29.8% and 31.3% in 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.

FSPTX has an annual expense ratio of 0.71% versus the category average of 1.05%.

Fidelity Select Software & IT Services Portfolio FSCSX aims for capital appreciation. The non-diversified fund invests majority of its assets in common stocks of companies engaged in research, design, production or distribution of products or processes that relate to software or information-based services. Some of the cybersecurity companies in this fund’s holding are Palo Alto Networks and FireEye.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has three and five-year return of 26.6% and 26.8%, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCSX has an annual expense ratio of 0.71% versus the category average of 1.05%.

Fidelity Select Financial Services Portfolio FIDSX fund aims for capital appreciation. This non-diversified fund invests majority of assets in the common stock of companies engaged in providing financial services to consumers and the industry. FIDSX has significant investment in fintech firms like The Travelers Companies and Visa.

This Sector – Finance product has a history of positive total returns for over 10 years. Specifically, the fund has three and five-year return of 10.7% and 15.2%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FIDSX has an annual expense ratio of 0.77%, which is below the category average of 1.07%.

Fidelity Real Estate Investment Portfolio FRESX fund aims for above-average income and long-term capital growth, which is consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies, principally engaged in the real estate industry and other real estate-related investments.

This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 8.6% and 4.8% 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.

FRESX has an annual expense ratio of 0.74% versus the category average of 1.12%.

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