On October 15, the US Census Bureau reported that retail sales and food services rose 0.7% in September, beating the consensus estimate of a 0.1% decline. August’s retail sales figure was also revised up to 0.9%. For the month, spending accelerated as coronavirus cases declined and students and employees returned to schools and offices. This, in turn, boosted sales at sporting goods, music and book stores, highlighting a 3.7% jump from August.

Sales at general and miscellaneous merchandise retailers also increased 2% and 1.8%, respectively, while online sales increased 0.6%. However, fear of the spread of the Delta variant of the coronavirus capped gains in restaurants and bars at 0.3% for the month, while overall spending on food and drink rose 0.7%. Consumers have cut back on spending on dining out, renting hotel rooms, or flying because of the release of the Delta variant. But as cases decline, demand for discretionary products and services will continue to increase.

Retail sales, excluding sales of automobiles and related products, increased 0.8%, more than the 0.5% forecast. Retail sales for August, excluding autos, were revised up to an increase of 2%. Auto sales rose 0.5% despite supply side constraints caused by a shortage of semiconductors, causing significant production delays. Spending at gas stations also jumped 1.8% last month.

Consumers had to pay extra because the country had the highest inflation in three decades. However, Americans have enough money to spend because they saved during the pandemic, and government stimulus is keeping the economy afloat. In addition, the labor market is tight and wages have risen sharply in recent months.

3 best fund choices

Given the rebound in retail sales in September, we are optimistic that the trend will continue for the last quarter of the year. Therefore, we have selected three mutual funds that are ready to grow. These funds carry a Zacks # 1 (strong buy) or 2 (buy) mutual fund rating. In addition, these funds have encouraging returns over one and three years. In addition, the minimum initial investment is $ 5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of Zacks’ Mutual Fund Rankings is to guide investors in identifying potential winners and losers. Unlike most fund rating systems, Zacks’ mutual fund ranking does not focus only on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? The low transaction costs and portfolio diversification without multiple commission fees associated with stock purchases are the main reason to put money in mutual funds (learn more: Mutual funds: advantages, disadvantages and how they make money for investors).

Fidelity Select Retail Portfolio The FSRPX fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in common stocks of companies engaged in the marketing of finished products and services, primarily to individual consumers.

This Zacks Sector-Other product has a history of positive total returns for over 10 years. Specifically, FSRPX has returned 18.4% and 21.6% over the past three and five years, respectively. To see how this fund has performed against its category and other ranked 1 and 2 mutual funds, please click here.

FSRPX has a Zacks mutual fund ranking of # 1 and an annual expense ratio of 0.73%, which is below the category average of 0.79%.

Fidelity Select Loisirs Portfolio The FDLSX fund aims for capital appreciation. This non-diversified fund invests a majority of assets in common stocks of companies primarily engaged in the design, production or distribution of goods or services in the leisure industries.

This Zacks Sector-Other product has a history of positive total returns for over 10 years. Specifically, FDLSX has a three- and five-year return of 16.6% and 17.1%, respectively. To see how this fund has performed against its category and other ranked 1 and 2 mutual funds, please click here.

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

Fidelity Select Commodity Portfolio The FDFAX fund aims for capital growth. It invests the majority of its assets in securities of companies whose main activity is the manufacture, marketing or distribution of everyday consumer products. The undiversified fund invests in both US and non-US issuers.

This Zacks – Other Product segment has a history of positive total returns for over 10 years. Specifically, FDFAX has returned 11.1% and 7.1% over the past three and five years, respectively. To see how this fund has performed against its category and other ranked 1 and 2 mutual funds, please click here.

FDFAX has a Zacks Mutual Fund Rank # 2 and an annual expense ratio of 0.75% compared to the category average of 0.76%.

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