The consumer discretionary sector has displayed strong performance, with the Consumer Discretionary Select Sector SPDR (XLY) growing by 25.5% up until the end of September. This robust growth is attributed to consistent interest rate hikes and heightened consumer spending on discretionary items. Despite inflationary pressures and surges in fuel prices, retail sales have remained steady, with September's sales rising by 0.7% to reach $704.9 billion, surpassing the estimated growth of 0.3%.
In light of this positive trend, investors are being encouraged to consider consumer discretionary-focused mutual funds, with expectations of a sector boom in December. These mutual funds offer various benefits including reduced transaction costs and diversified portfolios.
Three Fidelity Investments mutual funds have been singled out for recommendation: Fidelity Select Retailing Portfolio (FSRPX), Fidelity Select Consumer Discretionary (FSCPX), and Fidelity Select Leisure (FDLSX). The FSRPX fund, managed by Boris Shepov, has posted 3-year and 5-year annualized returns of 2% and 6.8%, respectively, with a net expense ratio of 0.72%. The FSCPX fund, managed by Jordan Michaels, has reported 3-year and 5-year annualized returns of 3% and 6.7%, respectively, with a net expense ratio of 0.76%. Lastly, the FDLSX fund, managed by Kevin Francfort, has shown 3-year and 5-year annualized returns of 12.2% and 10.1%, respectively, with a net expense ratio of 0.74%.
The top holdings for these funds include Amazon (NASDAQ:AMZN) and Home Depot (NYSE:HD) for both FSRPX and FSCPX; TJX (NYSE:TJX) for FSRPX; Tesla (NASDAQ:TSLA) for FSCPX; and McDonald’s (NYSE:MCD), Booking Holdings (NASDAQ:BKNG), and Hilton Worldwide for FDLSX.
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