ISM Service Index Rebounds In October: 3 Fund Picks

Per the latest report from the Institute of Supply Management (ISM) on Nov 5, its service index came in at 54.7% in October, surpassing the consensus estimate of 53.6%. Further, the rise in the index follows a three-year low of 52.6% it had witnessed in the previous month.

Further, service-oriented firms such as financial institutions, healthcare providers and restaurants reported growth in the month and boosted the overall service activity in the country. The rise was supported by improving conditions on the trade war front.

A reading above 50% indicates that the non-manufacturing sector economy is generally expanding. Gains were broad-based and occurred in 13 out of the total 17 industries that were surveyed. Under such circumstances, investing in mutual funds having significant exposure to services-related companies may prove prudent.

Service Activity Burgeons in October

The service side of America’s economy grew at a faster pace than the manufacturing sector. As a matter of fact, service-oriented businesses remained strong in October, improving for 117 consecutive months.

Furthermore, the Non-Manufacturing Business Activity Index surged to 57% in the month of October, posting growth for 123 months on the trot. Also, the Employment Index grew to 53.7% in the month. Moreover, ISM's Non-Manufacturing New Orders Index increased to 55.6% compared to the September reading of 53.7%. Meanwhile, new orders grew for the 123rd consecutive month in October.

3 Best Choices

We have thus selected three mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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