4 Mutual Funds To Ride The Surge In Industrial Production

Per the latest report by the Federal Reserve, industrial production rebounded in the month of June. This followed a steep decline the metric experienced in May. Gains were buoyed by a steady increase in manufacturing and mining output. Such an increase also raised second-quarter GDP estimates to as high as 5.2%, more than double the rate in the first quarter.

Fed Chair Jerome Powell made positive comments about the state of the economy in his latest testimony before the congress. Under such circumstances, investing in mutual funds having significant exposure to the manufacturing and industrial companies seems prudent.

US Industrial Production Grows for three straight quarters

Industrial production in the United States increased 0.6% for the month of June and 6% year over year in the second quarter. This also marked its third consecutive quarterly increase. Further, manufacturing output increased steadily by 0.8% in the month and 1.9% over the second quarter.

Strong industrial production figures indicate the strength in the U.S. economy. Moreover, manufacturing accounts for about 12% of the U.S. economy and any increase in the metric suggests that the economy is burgeoning.

Factors Supporting the Growth

A steady increase in production of automobiles and auto ancillary parts contributed to much of the gains last month. This metric increased 7.8%, rebounding from an 8.6% decline in May caused by a fire, which drastically affected the assembly of trucks. Notably, manufacturing output excluding automobiles increased only 0.3% in June.

Mining output increased by 1.2% to hit a new all-time high. This represents the fifth straight month of gains for the metric. The index also increased by a little over 19% in the second quarter.

4 Best Funds to Buy Now

Given such positives, we have highlighted four mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.

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