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Per the latest report from the Commerce Department, U.S. factory orders increased 0.7% in June. This marked its second consecutive rise in as many months. Such developments also indicate that the U.S. manufacturing sector is growing by leaps and bounds. The metric was boosted by robust demand for transportation equipment, electrical equipment, appliances as well as computer and electronic products.
Also, worldwide demand for manufacturing products witnessed a surge in the recent past. Under such broadly encouraging conditions, investing in mutual funds from the industrial sector seems prudent.
US Factory Orders Rise for the Second Straight Month
On Aug 2, the Commerce Department stated that U.S. factory orders for June rose to $501.7 billion. Further, new orders for manufactured durable goods also increased 0.8% to $251.5 billion in the month. This marked its fourth increase in the past five months.
Orders for transportation equipment rose 2.1%, providing a major boost to overall growth. Further, a 4.2% surge in orders for civilian aircraft provided the necessary impetus for growth in factory orders.
Moreover, orders of motor vehicles increased 0.9% in June and that for core capital goods increased 0.7% in the month. Finally, shipments for core capital goods, used to calculate the total business equipment spending in the GDP report rose 0.7%.
4 Best Funds to Buy Now
Given such positives, we have highlighted four industrial mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-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 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 Industrials Fund FCYIX seeks capital appreciation. FCYIX normally invests a large portion of its assets in common stocks of companies principally engaged in the research, development, manufacture, distribution, supply, or sale of materials, equipment, products, or services related to cyclical industries.