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4 Mutual Funds to Pick This Christmas

Christmas and optimism into year-end should overshadow fears of the Omicron variant. Investors can tap into the healthcare and consumer discretionary sectors to enjoy the rally.

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This story originally appeared on Zacks

It's that time of the year, driven by the Santa Claus rally and a dose of optimism into the year-end, when markets move north. Given that the coronavirus pandemic is still raging havoc across the globe, stalling reopening plans, resulting in stagflation and disappointments. However, with President Joe Biden agreeing to “absolutely no” lockdowns and outlining plans to help fight the fast-spreading Omicron variant of COVID-19, healthcare and consumer discretionary sectors are poised to gain.

- Zacks

Here’re our shortlisted mutual funds that investors can pick to enjoy Christmas and the year-end rally – Fidelity Select Retailing Portfolio FSRPXFidelity Select Leisure Portfolio FDLSXFidelity Select Health Care Portfolio FSPHX and Fidelity Select Consumer Discretionary Portfolio FSCPX.

On Dec 21, Biden said that there won’t be March 2020-style lockdowns to fight the Omicron spread rather, he and his administration have designed a new plan to protect Americans along with sufficient aid to help communities and hospitals. The plan includes deploying more booster shots in arms and distributing 500 million at-home COVID-19 testing kits that citizens can order for free from the government website. Additionally, for the months of January and February and the last few days of the year, Biden has ordered the immediate deployment of 1000 medical professionals from the military, including doctors and nurses. Basic protocols like social distancing, mask mandates and rapid testing will continue across the country.

Now coming to the seasonal phenomenon just around the corner, consumer discretionary funds could be the one secret gift that the Santa Claus rally could have for investors with surprisingly big returns this Christmas. Americans were confined indoors last Christmas, forced to follow protocols and give up on traveling to meet friends and family. A double-digit gain from this sector is in the cards with traveling open and retailers loading shelves. Be it online shopping or rushing to stores on Christmas eve, apparel, automotive and specialty stores and poised to boom.

Let us keep in mind that the National Retail Federation (NRF) has a strong forecast for holiday sales (during November and December) this year. President and CEO Matthew Shay expects “considerable momentum” in retail sales and forecasts growth between 8.5% and 10.5%, reaching $843.4-$859 billion.

4 Mutual Funds to Buy

Given the current scenario, we have shortlisted four funds that 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 on 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 Health Care Portfolio fund aims for capital appreciation. This non-diversified fund invests the majority of assets in common stocks of companies principally engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine.

This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 15.5% and 18.1% 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.

Fidelity Select Health Care Portfolio, a Zacks Mutual Fund Rank #1 fund, has an annual expense ratio of 0.69% versus the category average of 1.03%.

Fidelity Select Retailing Portfolio 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, FSRPX has returned nearly 26% and 23.3% 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 15.8% and 15.1%, 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 Consumer Discretionary Portfolio 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, FSCPX has three and five-year returns of 23.3% and 19.8%, 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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