3 Mutual Funds To Gain As Consumer Sentiment Perks Up

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On Dec 11, the University of Michigan reported that its preliminary reading for index of consumer sentiment for December climbed to 81.4 (in the two weeks ending Dec 9) from 76.9 in November. The consumer sentiment index hit the highest mark in February this year at 101, however, the pandemic weighed on sentiments and pulled the index down to 71.8 in April, its lowest this year.

The report also states that a sub-index measuring consumer expectations jumped to 74.7 from 70.5 in November, while the one that measures how Americans view current economic conditions increased to 91.8 from 87.

Looking ahead into the last month of the year and with a hope that a vaccine will be available soon, consumer sentiments have lifted and the University of Michigan index of consumer sentiment, which was expected to drop to 76, has now rebounded. Prospects for the consumer discretionary sector seem bright in such a scenario, with consumers expected to go back to normal shopping and celebrations although they need to adhere to social-distancing norms.

Along with that, in the initial months of the coronavirus outbreak, lockdown measures had prevented consumers from spending. This in turn has led to the creation of plenty of cash pool for discretionary purchases. Many of them have given up travelling plans this holiday and that amount can easily be directed toward discretionary buying. This pent-up demand and an increase in social activities could boost the consumer discretionary sector immensely. Per a CNBC article, a Morgan Stanley report estimated that “U.S. households have saved an extra $1.1 trillion as of August, compared to pre-pandemic levels.”

3 Funds to Buy

American consumers hold a positive outlook for the economy and given such a scenario, we have shortlisted three funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to grow. In addition, the minimum initial investment for these funds is within $5,000.

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