Americans are much more confident about the economy as they are optimistic about the labor market and expect inflation to ease further in the coming month. The optimism is being fueled by Donald Trump’s victory in the U.S. Presidential election last month, with expectations high from his administration once it takes office in January.
The ongoing optimism has seen consumer confidence jump in November to a 16-month high. Given the positive outlook, it makes an opportune time to invest in retail and discretionary funds such as Fidelity Select Retailing Portfolio FSRPX, Fidelity Select Leisure Portfolio FDLSX and Fidelity Select Consumer Staples Portfolio FDFAX.
Consumer Confidence Soars in November
The Conference Board said last week that the consumer confidence index soared to 111.7 in November from an upwardly revised 109.6 in October, surpassing the consensus estimate of a rise to 111.3. November’s reading was also the highest level since July 2023.
The Expectations Index, reflecting consumers' short-term outlook on income, business and job prospects, rose 0.4% to 92.3 in November, well above the threshold of 80, which signals a recession in the near term. The Present Situation Index, a gauge of consumers’ assessment of current business and labor market scenarios, rose 4.8 points to 140.9.
The post-election euphoria is driving the jump in consumer confidence in November, which has also seen markets rallying for the past month. Trump’s win has raised optimism surrounding a robust economy. Also, investors are expecting major reforms under Trump’s regime, including major tax cuts and fewer regulations.
Also, the minutes of the Federal Reserve’s latest FOMC meeting revealed that the central bank plans to initiate more rate cuts, although “gradually,” which will further help the broader market. The CME FedWatch tool currently indicates a 67.1% probability of a 25-basis point rate cut in December.
3 Best Choices
As a result, we've chosen three funds from the retail and discretionary sectors that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Retailing Portfolio fund aims for capital appreciation. FSRPX invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.
Fidelity Select Retailing Portfolio fund has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned nearly 12.2% and 14.6% over the past five and 10-year periods, respectively. Fidelity Select Retailing Portfolio fund has a Zacks Mutual Fund Rank #1 and its annual expense ratio is 0.64%, which is lower than the category average of 0.99%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Leisure Portfolio fund invests the majority of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries. FDLSX uses fundamental analysis of factors such as each issuer's financial condition and industry position, as well as market and economic conditions, for its decisions.
Fidelity Select Leisure Portfolio fund has a history of positive total returns for more than 10 years. Specifically, FDLSX has returned nearly 14.7% and 12.7% over the past five and 10-year periods, respectively. FDLSX has a Zacks Mutual Fund Rank #2 and its annual expense ratio is 0.69%, lower than the category average of 0.99%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Consumer Staples Portfolio fund aims for capital growth. FDFAX invests the majority of its assets in securities of companies primarily engaged in manufacturing, marketing, or distributing consumer staples products. Fidelity Select Consumer Staples Portfolio fund invests in both U.S. and non-U.S. issuers.
Fidelity Select Consumer Staples Portfolio has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 7.8% and 6.5% over the past five and 10-year periods, respectively. FDFAX has a Zacks Mutual Fund Rank #2, and its annual expense ratio is 0.68%, lower than the category average of 0.94%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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