Discover all about two financial sector-focused mutual funds with the potential to earn over 10% appreciation in the next twelve months.
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The financial sector is one of the primary barometers used to gauge an economy’s health. During periods of economic prosperity, people tend to invest more in homes, vehicles, etc., all of which impact financial services such as banking, insurance, investment, etc. Conversely, in a declining economy, the inverse is true. Nevertheless, banking services persistently thrive, even in a high-interest rate environment just like the current one, as banks continue to generate substantial net interest margins.
With this background in mind, let us explore the two financial services-focused mutual funds.
Fidelity Select Financial Services (FIDSX)
The FIDSX invests 94.87% of the funds in companies that provide financial services to consumers and industry. The FIDSX has a Smart Score of seven, meaning it has the potential to perform in line with market expectations. As of today’s date, FIDSX has 64 holdings with total assets of $518.30 million. Notably, FIDSX also carries a lucrative dividend yield of 3.23%.
On TipRanks, FIDSX has a Moderate Buy consensus rating. This is based on the weighted average consensus rating of each stock held in the portfolio. Of the 64 stocks held, 45 have a Buy rating while 19 stocks have a Hold rating. The average Fidelity Select Financial Services price target of $12.32 implies 12.3% upside potential from the current levels.
Year-to-date, FIDSX has gained 1.8%. Its top five major holdings include Mastercard (MA), Wells Fargo (WFC), Bank of America (BAC), Reinsurance Group (RGA), and Essent Group (ESNT).
Vanguard Financial Index Fund Admiral Shs (VFAIX)
The VFAIX invests 94.35% of its funds in the stocks of banks, insurance companies, and other firms that provide financial services. Similar to FIDSX, VFAIX also has a Smart Score of seven, meaning it has the potential to perform in line with market expectations. VFAIX also pays healthy dividends, yielding 2.54% currently. Compared to the FIDSX, this fund is larger, with 394 holdings and total assets worth $9.39 billion.
On TipRanks, VFAIX has a Moderate Buy consensus rating. This is based on its holdings of 241 stocks with a Buy rating, 139 stocks with a Hold rating, and 14 stocks with a Sell rating. The average Vanguard Financial Index Fund Admiral Shs price target of $47.47 implies 10.9% upside potential from the current levels.
VFAIX has gained 4.7% so far this year. Its top five holdings include Berkshire Hathway class B (BRK.B), JPMorgan Chase (JPM), Visa (V), Mastercard, and Bank of America.
Ending Thoughts
Both FIDSX and VFAIX focus on the financial services sector, which is an important aspect of any economy. It is important to have at least some exposure to this sector to make your portfolio truly diversified. To make your decisions easier, investors can choose from the wide variety of financial sector-focused mutual funds available in the market with the help of TipRanks tools.
