December 7, 2021

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Something Inside of Us Sleeps, The Sleeper Must Awaken

4 Funds to Scoop Up on Winning Year-End Themes

Thematic investment has helped investors cope with market gyrations and considering the rapidly changing consumer behavior and effects of the coronavirus pandemic, let us discuss three themes that can bear profit for investors as the year approaches an end. As we approach the year-end, and the holiday season knocks at the door, trends like e-commerce, seasonal spending, video games can prove beneficial. Hence, retail, leisure, travel and gaming sectors will continue to be in the limelight. Given the trends, investors can focus on funds like Fidelity Select Retailing Portfolio FSRPX, Fidelity Select Leisure Portfolio FDLSX, Fidelity Select Technology Portfolio FSPTX and Fidelity Select Consumer Discretionary Portfolio FSCPX.

The holiday season draws in consumers, specifically the apparel, gifts, toys and leisure stores. Per a Rakuten Intelligence’s prediction, November is expected to be the strongest month for e-commerce and apparel sales in 2021. With coronavirus cases subsiding, vaccination efforts picking up and restrictions being lifted, consumers will not only spend online but also visit brick-and-mortar stores. Sales are expected to jump 30% in the fourth quarter from the same period last year and even cross the pre-pandemic levels.

In a separate report, National Retail Federation (NRF) predicts holiday sales growth between 8.5% and 10.5% during November and December from last year, nearing $843.4-$859 billion. Deloitte’s survey also states that 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. Per the NDP survey, 61% of consumers said they need to revamp wardrobes and make the most of this year’s fall and winter collection of different big and small brands. Hence, their shopping list has a mixed bag of sleepwear, winterwear necessities.

Even with the easing of pandemic-related restrictions, the craze for video games is expected to continue. NDP expects fourth-quarter sales of video games to reach $18.9 billion, which suggests a 3% increase from the same period last year. The only concerns for the industry are the unpredictable and insufficient supply of new console hardware. Additionally, the price difference between the PlayStation console and Nintendo Switch lends an edge to the latter in the gaming race. Even with supply-side constraints restricting gains, the gaming content, subscription and mobile gaming space will continue to boost sales.

4 Mutual Funds to Buy

Given the current scenario and considering the winning year-end themes, we are shortlisting four funds, including retailers, travel & leisure service and products providers, and toys and video games companies. 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 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 fund aims for capital appreciation. This non-diversified fund invests most 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, FSRPX has returned 25.9% and 23.6% 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.

Fidelity Select Retailing Portfolio 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 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, FDLSX has three and five-year returns of 20.1% and 17.9%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Fidelity Select Leisure Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, below the category average of 0.79%.

Fidelity Select Technology Portfolioaims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies engaged in offering, using, or developing products, processes, or services that will provide or 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, FSPTX is a non-diversified fund and has returned 38.1% and 32.1% 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.

Fidelity Select Technology Portfolio has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%, below the category average of 1.05%. 

Fidelity Select Consumer Discretionary Portfolio fund aims for capital appreciation. This non-diversified fund invests most 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, FSCPX has three and five-year returns of 23.8% and 20.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Fidelity Select Consumer Discretionary Portfolio 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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