Tag Archives: income

5 Consumer Discretionary Funds To Buy On A Spending Splurge

Consumer spending levels increased at the fastest pace in eight months this January. Not only consumers bought big-ticket items like cars and houses, but they also ramped up purchases of a range of goods that include other discretionary products. Rise in wages, decline in the jobless rate, cheap gasoline price and winter thaw helped spending levels to move north. Given the loosening of purse strings, investing in funds from the consumer discretionary sector may prove to be profitable as a major part of consumer expenditures go to this sector. What is more encouraging, income levels rose in January for the 10th straight month. This shows that consumers are in a position to spend more in the coming months. Consumer Expenditure Climbs in January The Commerce Department on Feb. 26 reported that personal spending increased 0.5% in January. The rise exceeded the consensus estimate of a rise by 0.3%. Moreover, a price index of consumer spending level went up in January. The personal consumption expenditures (PCE) index in the 12 months through January advanced 1.3%, the highest increase since Oct. 20 14. The core-PCE index that excludes food and energy prices also rose 1.7% in the 12 months through January, the largest increase since July 20 14. Telltale Signs of Consumption Pickup Retail sales are off to a good start this year, indicating strength in consumer spending. The Commerce Department said on Friday that sales at retail stores rose 0.2% in January. Consumers mostly bought big-ticket items while online store sales also moved north. The so-called core retail sales figure that excludes automobiles, gasoline, building materials and food services also increased 0.6% in January following a decline of 0.3% in December. Car sales too spiked in January. At a seasonally-adjusted annualized rate (“SAAR”), car sales increased to 17.55 million units in Jan. 20 16 from 17.32 million units in Dec. 20 15, the highest SAAR for any January since 2006. Moreover, existing home sales for January hit the highest level since last July. Existing home sales increased 0.4% in January to a seasonally-adjusted annual pace of 5.47 million. Rise in Wages, Low Fuel Price Boost Spending Higher wages and steady hiring helped consumers to step up their purchases in January. Average hourly wage growth increased to 2.5% in January compared with year-ago levels. Wages grew in January at the best pace in about six years. Wage growth picked up momentum after remaining almost flat for several years following the recession. Moreover, the U.S. unemployment rate was 4.9% in January, the lowest since Feb. 2008. Many analysts believe that it is close to “full employment”. Cheap gasoline is also powering Americans’ ability to lift spending levels. Until recently, gasoline prices had hit a 12-year low across the Midwest. The Federal government had lowered its national average gasoline price forecast for this year by 5 cents to $ 1.98 a gallon. Separately, a return to normal winter temperatures also boosted spending. 5 Consumer Discretionary Funds to Buy Banking on these encouraging trends witnessed in January, it is expected that consumer spending levels will improve further in the coming months. Additionally, households’ purchase on a range of goods not only increased in January, but also their incomes rose too. According to the Commerce Department, personal income gained 0.5%, more than the consensus estimate of a 0.4% increase. More income generally translates into more expenditure. Moreover, U.S. consumer sentiment has already started showing signs of recovery in February. The Thomson Reuters/University of Michigan’s final consumer sentiment reading for this month came in at 9 1.7, which was higher than the preliminary reading of 90.7. Given the healthy pattern of consumer spending, it will be wise to invest in funds linked to the consumer discretionary or cyclical sector. More money in consumers’ pocket will eventually increase spending on discretionary items. The consumer discretionary sector includes companies that sell nonessential goods and services. This sector includes companies involved in retail, automobiles, media, consumer services, consumer durables and leisure products. Here we have selected five such consumer discretionary or cyclical funds that boast a Zacks Mutual Fund Rank # 1 (Strong Buy) or #2 (Buy), have positive three-year and five-year annualized returns, have minimum initial investment within $5,000 and carry a low expense ratio. Fidelity Select Consumer Discretionary Portfolio No Load (MUTF: FSCPX ) seeks growth of capital. This fund invests a large portion of its assets in securities of companies involved in the manufacture and distribution of consumer discretionary products and services. FSCPX’s three-year and five-year annualized returns are 14.3% and 12.9%, respectively. Annual expense ratio of 0.79% is lower than the category average of 1.4 1%. FSCPX has a Zacks Mutual Fund Rank # 1. Putnam Global Consumer Fund A (MUTF: PGCOX ) seeks growth of capital. This non-diversified fund not only invests a major portion of its assets in companies in the consumer staples space, but also invests in discretionary products and services industries. PGCOX’s three-year and five-year annualized returns are 10.6% and 9.3%, respectively. Annual expense ratio of 1.26% is lower than the category average of 1.43%. This fund has a Zacks Mutual Fund Rank # 1. Fidelity Select Retailing Portfolio No Load (MUTF: FSRPX ) invests the major portion of its assets in securities of firms involved in merchandising finished goods and services to consumers. FSRPX’s three-year and five-year annualized returns are 20. 1% and 18.4%, respectively. Annual expense ratio of 0.8 1% is lower than the category average of 1.4 1%. This fund has a Zacks Mutual Fund Rank #2. Fidelity Select Automotive Portfolio No Load (MUTF: FSAVX ) seeks capital appreciation. The fund invests a large portion of its assets in companies involved in the manufacture or sale of automobiles, trucks, specialty vehicles, parts, tires and related services. FSAVX’s three-year and five-year annualized returns are 7.9% and 2.7%, respectively. Annual expense ratio of 0.85% is lower than the category average of 1.4 1%. This fund has a Zacks Mutual Fund Rank #2. Fidelity Select Multimedia Portfolio No Load (MUTF: FBMPX ) seeks capital appreciation. The fund invests a major portion of its assets in companies engaged in the production, sale and distribution of goods or services used in the broadcast and media industries. FBMPX’s three-year and five-year annualized returns are 1 1.2% and 12.4%, respectively. Annual expense ratio of 0.8 1% is lower than the category average of 1.4 1%. This fund has a Zacks Mutual Fund Rank #2. Original post

Ivy Portfolio March Update

The Ivy Portfolio spreadsheet tracks the 10-month moving average signals for two portfolios listed in Mebane Faber’s book The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets . Faber discusses 5, 10, and 20 security portfolios that have trading signals based on long-term moving averages. The Ivy Portfolio spreadsheet on Scott’s Investments tracks both the 5 and 10 ETF Portfolios listed in Faber’s book. When a security is trading below its 10-month simple moving average, the position is listed as “Cash”. When the security is trading above its 10-month simple moving average, the position is listed as “Invested”. The spreadsheet’s signals update once daily (typically in the late evening) using dividend/split adjusted closing price from Yahoo Finance. The 10-month simple moving average is based on the most recent 10 months, including the current month’s most recent daily closing price. Even though the signals update daily, it is not an endorsement to check signals daily or trade based on daily updates. It simply gives the spreadsheet more versatility for users to check at his or her convenience. The page also displays the percentage each ETF within the Ivy 10 and Ivy 5 Portfolio is above or below the current 10-month simple moving average, using both adjusted and unadjusted data. If an ETF has paid a dividend or split within the past 10 months, then when comparing the adjusted/unadjusted data you will see differences in the percent an ETF is above/below the 10-month SMA. This could also potentially impact whether an ETF is above or below its 10-month SMA. Regardless of whether you prefer the adjusted or unadjusted data, it is important to remain consistent in your approach. My preference is to use adjusted data when evaluating signals. The current signals based on February 29th’s adjusted closing prices are below. This month VNQ , TIP and BND are above their moving average and the balance of the ETFs are below their 10-month moving average. The spreadsheet also provides quarterly, half year, and yearly return data courtesy of Finviz . The return data is useful for those interested in overlaying a momentum strategy with the 10-month SMA strategy: Click to enlarge I also provide a “Commission-Free” Ivy Portfolio spreadsheet as an added bonus. This document tracks the 10-month moving averages for four different portfolios designed for TD Ameritrade, Fidelity, Charles Schwab, and Vanguard commission-free ETF offers. Not all ETFs in each portfolio are commission free, as each broker limits the selection of commission-free ETFs and viable ETFs may not exist in each asset class. Other restrictions and limitations may apply depending on each broker. Below are the 10-month moving average signals (using adjusted price data) for the commission-free portfolios: Click to enlarge Click to enlarge

Random Ideas: Buy Global Defence And American Transport Shares

Two sectors deserving your investing scrutiny. Defence Has it struck you that whilst global economic and thus earnings growth is slowing, defence spending is accelerating? This is logical: “All politics are local”, as Tip O’Neill quipped years ago. Thus, politicians are rallying the masses against the “bad foreigner” who is to blame for the mess that politicians keep making at home by not structurally reforming their economies. Investment implication : keep buying shares (or a credible sector ETF), particularly in the defence sectors of America, Europe, Japan, South Korea and Australia (who want to increase defence spending by 80 per cent over the next decade). Transport Is economic growth really as terrible as all that? (Or are large investment banks merely using some flicks of bad news in order to drive profits by driving trading turnover, now that margins have collapsed?) Were economic growth so dire? Then why has America’s Dow Jones Transport Sector been gaining for the past six weeks? According to the Financial Times (FT) of 27th February, p. 15, ” The rebound for the closely watched sector, which includes 20 companies such as United Parcel Service (NYSE: UPS ), railway Norfolk Southern (NYSE: NSC ) and Delta Air Lines (NYSE: DAL ), is seen as a sign that the broader US equity market can gain further momentum.” All of this lends credibility to our long-held view that slowly, America’s Economic Time® is improving ; indeed, this is why the Fed has started raising rates, albeit gingerly. Investment implication : Buy cheap American transport stocks or an appropriate American transport sector ETF.