4 Funds to Pick as Retail Sales Rebound in June

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On Jul 16, the Census Bureau reported that U.S. retail and food services sales increased 0.6% or $617.9 billion in June, after declining 1.7% in May (revised downwardly from 1.3% decline). Despite the lingering effects of the pandemic and restrictions levied in several areas, retail sales are now up 18% year over year, exceeding pre-pandemic levels on fiscal stimulus and pent-up demand.

Though Americans continued spending on household goods and apparels in June, a huge chunk of the amount was shifted to traveling, dining out and entertainment, basically all activities avoided during the pandemic. Spending at restaurants and bars jumped 2.3% to $70.6 billion in June and is 40.2% higher than the same period last year. The segment has now recorded a steady rise for the fourth straight month and through the first six months of this year, and restaurant receipts are up almost 38%.

Spending across clothing and clothing accessories stores rose 2.6% in the previous month and is up 47.1% from June 2020. Grocers, big-box electronics stores, department chains and Internet retailers posted strong sales in June. Sales at gas stations also edged up 2.5%, but Americans have to pay higher as gas prices have risen sharply this year. The leisure and hospitality sector added 343,000 new jobs, which is 40% of the total job gains in June. Reopening and dine-in set ups have led to massive demand for staff across bars and restaurants.

The report also stated that retail sales, excluding autos, jumped 1.3% in June, much above the consensus estimate of 0.4% and a rebound from May’s downwardly revised figure of a 0.9% decline. There was a 2% decline in auto receipts last month, due to shortage in supply of available vehicles. In fact, prices for old and new cars jumped dramatically last month, while used car prices increased a record-high of 10.5%.

4 Top Fund Picks

Given the rebound in retail sales in June, we are optimistic that the trend will continue for the rest of the year. Hence, we have shortlisted four mutual funds that are poised to grow. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.

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 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 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 Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned 23.7% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, which is below the category average of 0.79%.

Fidelity Select Leisure Portfolio FDLSX fund aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies, principally 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 three and five-year return of 16.6% and 16.7%, respectively. To see how this fund performed compared in 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 0.77%, which is below the category average of 0.79%.

BlackRock Commodity Strategies Portfolio Investor A Shares BCSAX fund aims for total return. The fund focuses on investments in commodity-linked derivatives and to plans to meet coverage and collateral requirements associated with these derivative investments. 

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, BCSAX has three and five-year return of 6.7% and 5.7%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

BCSAX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.97%, which is below the category average of 1.11%.

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 13.3% and 7% 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 #2 and an annual expense ratio of 0.75% versus the category average of 0.76%.

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