4 Mutual Funds to Grab This Holiday Season

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After spending the last holiday season indoors with coronavirus restrictions in place, Americans are excited to go back to visiting stores. Retailers expect holiday shoppers to visit both brick-and-mortar and website stores to pick up clothes, toys and other gifting items.

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Per the National Retail Federation’s (NRF) report released on Oct 27, “holiday spending has the potential to shatter previous records” this year. The holiday sales during November and December this year are expected to grow between 8.5% and 10.5% from last year, nearing $843.4-$859 billion. The figures exclude sales at automobile dealers, gasoline stations and restaurants, depicting a “considerable momentum” going into the holiday season, per NRF President and CEO Matthew Shay.

The online shopping trend is expected to continue, with online and other non-store sales estimated to grow between 11% and 15% to a total of between $218.3 billion and $226.2 billion. Digital mediums helped shoppers meet demand during the holiday season last year amid the pandemic. However, consumers will also step into stores to enjoy the seasonal shopping spree with restrictions being eased. This leads NRF to expect retailers to hire between 500,000 and 665,000 seasonal workers, and the trend has been witnessed in October, too, as retailers announced thousands of open positions early this year.

There are a couple of hurdles this holiday season that cannot be overlooked. The pandemic-related supply chain disruptions have caused shortages of goods across most retail chains and have led to inflationary pressure throughout the year. However, retailers are investing to mitigate supply-chain hurdles to ensure they have products on their shelves. In fact, a healthy labor market, growing wage compensation, strong household fundamentals are expected to support strong spending this holiday season.

Per a survey conducted by Deloitte, this holiday season, an average American family is expected to spend $1,463, a 5% rise from the same period last year, with high-income households driving the uptick. In fact, per Accenture’s 15th Annual Holiday Shopping Survey study, 70% of Gen Zer’s are planning to shop in-store, to support charitable organizations and local communities and boost sales among local retailers.

4 Mutual Funds to Buy

The holiday season retail sales outlook seems very bright and investors can make the most by picking these four mutual funds. The selection includes retailers, travel & leisure service and products providers and some technology funds engaged in online retailing and sale of toys and video games.

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 their 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 the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges 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 the majority of its assets in securities of companies that merchandise finished goods and services to individual customers. FSRPX invests in both U.S. and non-U.S. stocks.

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 18.4% and 21.6% in the past three and five years, 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%, below the category average of 0.79%.

Fidelity Select Leisure Portfolio FDLSX fund aims for capital appreciation. The fund invests at least 80% of its assets in companies that design, produce or distribute goods or services in the leisure industries. This non-diversified fund invests in both domestic and foreign stocks.

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, the fund has three and five-year returns of 16.6% and 17.1%, 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%, below the category average of 0.79%.

Franklin DynaTech Fund Class A FKDNX aims for capital appreciation. The fund invests in common stocks of companies that the fund manager believes are leaders in innovation, take advantage of new technologies, have superior management, and benefit from new industry conditions in the dynamically changing global economy.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FKDNX has returned 26.1% and 26.9% 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.

FKDNX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.85%, below the category average of 0.99%. Some of the fund’s top retail and gaming stock holdings are Amazon, Booking Holdings, Tencent Holdings, Ninetendo and Activation Blizzard.

Fidelity Select Consumer Discretionary Portfolio FSCPX fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies that manufacture and distribute consumer discretionary goods and services. FSCPX invests in both domestic and foreign stocks.

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, the fund has three and five-year returns of 16.7% and 18%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, below the category average of 0.79%.

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