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3 Retail Mutual Funds To Gain From Consumer Spending Surge

Retail is one of the main sectors that benefits from higher consumer spending as expenditures in the retail sector represents almost 30% of the consumer spending, which has increased significantly in recent times. After surfacing as one of the few bright spots in the first-quarter GDP report, consumer spending was the mainstay of the economy in the second. Consumer expenditure is likely to continue this positive trend on the back of strong economic fundamentals including robust labor-market condition, increase in wages and slump in oil prices. Moreover, the second-quarter earnings performance from the retail sector also confirms the bullish trend. Hence, investors may consider retail mutual funds with strong fundamentals in order to gain from this favorable economic environment. Below we will share with you 3 buy-ranked retail mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy) as we expect these mutual funds to outperform their peers in the future. Fidelity Select Consumer Discretionary Portfolio (MUTF: FSCPX ) normally invests a lion’s share of its assets in securities of companies mostly involved in the consumer discretionary sector. FSCPX primarily invests in common stocks of companies all over the globe. Factors including financial strength and economic condition are considered before investing in a company. The Fidelity Select Consumer Discretionary Portfolio is non-diversified fund and has returned 9.2% in the last one year. Peter Dixon is the fund manager and has managed FSCPX since 2014. Fidelity Select Retailing Portfolio (MUTF: FSRPX ) seeks growth of capital. FSRPX invests a large chunk of its assets in securities of retailing companies that are traded within the domestic boundary. FSRPX may also invest in derivatives including futures contracts and options. FSRPX invests a notable share of its assets in small- and mid-cap companies. FSRPX may consider ADRs to invest in foreign companies and securities issued by the US government. The Fidelity Select Retailing Portfolio fund has returned 8.2% in the last one year. FSRPX has an expense ratio of 0.81% as compared to category average of 1.46%. Putnam Global Consumer A (MUTF: PGCOX ) invests in mid-to-large companies that are involved in the manufacture, sale or distribution of consumer staples and consumer discretionary products and services. PGCOX uses “blend” strategy to invest in common stocks of companies. The Putnam Global Consumer A fund has returned 2.4% in the last one year. As of June 2015, PGCOX held 96 issues with 6.61% of its assets invested in Amazon.com (NASDAQ: AMZN ). Original Post Share this article with a colleague

Summer Madness To Nut Case? A Fall Preview Of ETFs

Summer 2015 saw investors sweating it out on the markets as the U.S. stock market ran into a correction territory thanks to the China gloom, Fed uncertainty, emerging market weakness and slumping commodities. Perhaps they should have stuck to the popular trading adage “Sell in May and Go Away”. After all, the May end to early September period has historically been known for melting profits at the bourses. This time around, the markets went berserk with performances swinging from sky-high in certain sectors to dreadful by others. Will the markets continue to shake in fall as well? Let’s check out: Housing Booms The housing market fired on all cylinders in summer thanks to soaring demand for new and rented homes, rising wages, accelerating job growth, affordable mortgage rates, and of course increasing consumer confidence. Among the most notable data, new home construction jumped to an almost eight-year high in July and existing home sales rose to an eight-year high. Further, homebuilder confidence in August surged to a level not seen in decades. The robust numbers spread optimism across the sector with the iShares U.S. Home Construction ETF (NYSEARCA: ITB ) and the SPDR Homebuilders ETF (NYSEARCA: XHB ) touching new highs on August 18 and 19, respectively. Both the ETFs have a decent Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook and were up 3.6% and 0.1%, respectively, over the past three months. The outperformance is likely to continue in the coming months given that the residential and commercial building industry has a solid Zacks Rank in the top 29%. China Glooms China has been roiling the global stock markets since the start of the summer with worries intensifying last month when the country surprisingly devalued its currency renminbi by 2% to ramp up exports. After that, sluggish factory activity data heightened fears of China’s hard landing and the resultant global damage. This led to terrible trading in China ETFs, which were the hot spot at the start the year. Even the latest round of monetary easing by the People’s Bank of China (PBOC) to fight the malaise did not help the stocks to recover the losses. Given the steep decline in the stocks, China ETFs had a bloodbath with the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEARCA: CNXT ) and the Deutsche X-trackers Harvest CSI 500 China-A Shares Small Cap ETF (NYSEARCA: ASHS ) stealing the show. Each of the funds was down over 20% in August and nearly 53% over the past three months. CNXT has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook while ASHS has a Zacks ET Rank of 3. Rough trading in China is likely to continue at least in the near term given that the world’s second-largest economy is faltering with slower growth, credit crunch, a property market slump, weak domestic demand, lower industrial production and lower factory output. Corporate profits are also lower than a year ago. Additionally, a slew of recent measures are not helping in any way to revive investors’ confidence. Further, most analysts believe that China will continue to face a long period of uncertainty that would result in more volatility Crazy Run of ‘The Oil’ After a stable start to summer, oil saw a frenzied August, showing large swings in its prices. In fact, the commodity exhibited the maximum volatility in 24 years . This is because oil price enjoyed its biggest rally of more than 25% in the last three days of August but softened again as worries about growth in the Asian powerhouse resurfaced. U.S. crude was trading around $60 per barrel for most of the first half of summer but gradually dropped to nearly $38 per barrel on August 25 – a level not seen since 2009. Oil suddenly sprung up to over $49 per barrel for a three-day period ending August 31, and again retreated to around $46 per barrel. Even after the spectacular three-day performance, energy ETFs failed to recoup their losses made in mid-to-late summer. In particular, stock-based energy ETFs like the First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) and the PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) plunged 35.9% and 32.4%, respectively, over the past three months while futures-based energy ETFs like the iPath S&P Crude Oil Total Return Index ETN (NYSEARCA: OIL ) and the United States Oil ETF (NYSEARCA: USO ) lost 31.6% and 27%, respectively. FCG and PSCE have a Zacks ETF Rank of 4 or ‘Sell’ rating with a High risk outlook. The outlook for oil and the related ETFs look dull at present given the unfavorable demand and supply dynamics. In fact, the International Energy Agency (IEA) in its recent monthly report stated that the global oil market would remain oversupplied through 2016 though lower oil prices and a strengthening economy will boost oil demand at the fastest pace in five years. Yet, demand is currently not as strong as expected given the China slowdown and weakness in emerging markets. Automotive Thrives The U.S. automotive industry is on top gear with fat wallets, rising income and increasing consumer confidence adding adequate fuel. This is especially true as auto sales have been consecutively on the rise over the past four months with sales remaining above the healthy 17-million mark. The industry is likely to flourish going forward given that the economy is gaining traction after the first-quarter slump. Economic activity is picking up, labor market is strengthening, consumer spending is increasing, and the housing market is improving. Additionally, lower gasoline price is a huge boon to auto sales. The upside can be further confirmed by the solid Zacks Industry Rank, as about two-thirds of the industries under the auto sector have a strong Zacks Rank in the top 30%, suggesting growth ahead. Investors could ride out this surging sector with the only pure play the First Trust NASDAQ Global Auto Index ETF (NASDAQ: CARZ ) . The fund was a victim of recent broad sell-off, shedding 16.4% over the last three months. However, the ETF has a solid Zacks ETF Rank of 2 with a High risk outlook, urging investors to take advantage of the current beaten down price. Link to the original post on Zacks.com

3 Small-Cap Growth ETFs To Beat Global Worries

Concerns regarding sluggish global growth have curbed the major benchmarks in recent times. Dismal manufacturing data out of China once again sent jitters in the global markets on Tuesday. Disappointing factory data in the Eurozone further dampened investor sentiment. On the other hand, recently released economic data showed that the U.S. economy has recovered significantly from the sluggish growth conditions in the first quarter. While others are struggling to stem the rout, the U.S. economy seems to be standing tall amid falling towers. In this situation, ETFs that have significant exposure to companies with a more domestic focus are likely to gain from improving fundamentals. China, Europe Suffering China The China Federation of Logistics and Purchasing reported on Tuesday that the official manufacturing PMI index declined to a three-year low in August to 49.7 from July’s reading of 50. Meanwhile, the final Caixin Manufacturing Purchasing Managers’ index fell from 47.8 in July to 47.3 in August, reaching its lowest level in the last 77 months. The reading below 50 signaled that manufacturing activity contracted in August. Moreover, a plunge of 8.3% in export and a decline of 8.1% in import in July indicated the world’s second biggest economy is suffering from both weak global and domestic demand. It was also reported that producer prices declined to the lowest level in six years in July. These disappointing data raised concerns that China may fail to achieve the target of 7% GDP growth rate this year. Europe Investors are also worried about the economic condition of Europe. The final reading of Markit’s manufacturing PMI came in at 52.3 in August, below July’s reading of 52.4. Though the reading of the index reached a 16-month high in Germany, the reading out of France and Italy declined to the lowest level in last four months. Meanwhile, the Markit/Cips UK manufacturing PMI declined from 51.9 in July to 51.5 in August, indicating a slowdown in manufacturing activity in the U.K. Meanwhile, it was also reported that the Eurozone’s inflation rate was at only 0.2% in August, significantly below the targeted rate of 2%. Last month, Eurostat reported that the common currency bloc expanded at a rate of only 0.3% in the second quarter, down from the first quarter’s growth rate of 0.4%. While the French economy remained stagnant in the second quarter following a 0.7% rise in the first, growth of only 0.2% in Italy came in below the first quarter’s growth rate of 0.3%. U.S. Outperforming Despite global growth coming to a grinding halt, the “second estimate” released by the U.S. Department of Commerce last month showed that the GDP in the second quarter advanced at a pace of 3.7%, significantly higher than the first quarter’s rise of only 0.6%. The report also showed that gross domestic purchases surged at a rate of 3.4% during the quarter compared to a gain of 2.5% in the first, indicating an increase in domestic demand. Also, the personal consumption expenditure (PCE) price index gained 1.5% during the quarter, a turnaround from the first quarter’s 1.9% decline. Meanwhile, job data released last month showed that labor market condition in the U.S. remained strong in July. While the U.S. economy created a total of 215,000 jobs in July, the unemployment rate remained unchanged from June’s seven-year low of 5.3%. Separately, the Commerce Department reported on Tuesday that construction spending gained 0.7% to a seasonally adjusted annual rate of $1.08 trillion, hitting its highest tally since May 2008. 3 ETFs to Buy Small-cap ETFs that are expected to have limited international exposure are believed to remain untouched by global growth concerns. Meanwhile, these domestically-focused ETFs are poised to benefit from the favorable economic environment in the U.S. Hence, we have highlighted three well-ranked small-cap growth ETFs that investors may find profitable in the current situation. PowerShares Russell 2000 Pure Growth ETF (NYSEARCA: PXSG ) This fund provides exposure across 310 securities by tracking the Russell 2000 Pure Growth Index. It is well diversified across its holdings with none of the companies accounting for more than 1.4% of total assets. Sector-wise, health care takes the top spot at 31.5%, while information technology and consumer discretionary take the next two positions. PXSG has amassed $31.3 million in its asset base while it sees light volume of around 2,947 shares a day. The ETF has 0.41% in expense ratio and has a Zacks ETF Rank #2 (Strong Buy) with a Medium risk outlook. The ETF returned 1.5% over the past one week. SPDR S&P 600 Small Cap Growth ETF (NYSEARCA: SLYG ) This fund follows the S&P SmallCap 600 Growth Index, holding 355 stocks in its portfolio. It is also well diversified across its holdings with none of the companies accounting for more than 1.3% of total assets. The ETF has been able to manage $544.2 million in its asset base and has a low traded volume of 20,249 shares per day. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook and charges 15 bps in annual fees and expenses. The product returned 1.4% over the past one week. Vanguard Small Cap Growth ETF (NYSEARCA: VBK ) This ETF provides exposure to 738 firms by tracking the CRSP US Small Cap Growth Index. The fund has amassed $4.47 billion in its asset base while it sees a moderate volume of around 188,000 shares a day. Only 5.4% of the fund’s assets were invested in the top 10 holdings. About 20.6% of its assets are allocated to the financial sector, which takes the top spot among other sectors. The ETF charges a fee of only 9 bps annually and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook. It returned 0.3% in the past one week. Original Post