Wall Street has moved mostly higher this week after the Senate Democrats passed a budget resolution for the $3.5-trillion bill on Aug 11. This was just a day after the Senate passed the $1.2-trillion infrastructure package, known as the Infrastructure Investment and Jobs Act.

While investors wait for the big budget resolution to boost the U.S. economy, the infrastructure bill is in the cards and will now be moved to the House of Representatives for vote. This places utilities, infrastructure and communications sectors favorably for growth.

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The Senate’s approval of President Joe Biden’s $1-trillion infrastructure plan will also help stocks and funds tied to economic growth rally in the coming months. Per the latest news, the Senate has passed the bipartisan infrastructure bill worth $550 billion, and will get added to the previously-approved $450 billion fund.

The proposal stands to allocate $110 billion to the development of roads, bridges and other major projects and $66 billion to passenger and freight rail (railroads safety, but nothing for high-speed rail). The bill also aims to boost digitization efforts and nearly $65 billion will be invested in high-speed Internet or 5G deployment.

In the utilities sector, the proposal is to invest $50-$55 billion in water infrastructure and clean water projects. The fund includes $15 billion for lead pipe replacement, $10 billion for chemical clean-up, and rest of the fund will be provided to tribal communities for clean drinking water.

The bill proposes $25 billion for airports and $17 billion for ports. Additionally, $11 billion will be invested in making roads safe by reducing car crashes and fatalities, especially, focusing on highway, pedestrian, pipeline, and other safety areas. Another $39 billion will be allocated to modernize public transit and improve access for disabled people.

Further, per Biden’s plans to cut down emissions in half by 2030 and make America go carbon neutral by 2050, the bill will allocate $15 billion toward electric vehicle infrastructure and electric buses and transit. Though the amount is much lower than Biden’s initial proposal, it includes $21 billion toward environmental clean-up (superfund and brownfield sites, abandoned mines, and old oil and gas wells).

Outside the infrastructure bill, the $3.5-trillion bill also holds an instruction for the banking committee to invest in public housing, with $198 billion spending allotted for the Energy and Natural Resources Committee.

4 Funds to Buy

While the house of Representatives decides the fate of the infrastructure bill, it definitely stands to benefit utilities, infrastructure and communications mutual funds. All the funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to grow. These funds also have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Real Estate Investment Portfolio (FRESX) fund aims for above-average income and long-term capital growth, which is consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies, principally engaged in the real estate industry and other real estate-related investments.

This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. 

Specifically, FRESX has returned 11.5% and 6.3% over the past three and five years, respectively.

Fidelity Select Transportation Portfolio (FSRFX) fund aims for capital growth. The non-diversified fund mostly invests majority of assets in common stocks of companies that offer transportation services or are engaged in activities in the transportation sector.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. 

Specifically, FSRFX has returned nearly 9% and 14% over the past three and five-year period, respectively.

Fidelity Select Utilities Portfolio (FSUTX) aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies primarily engaged in the utilities industry and companies generating most of their revenues from utility operations.

This Zacks Sector – Utilities has a history of positive total returns for more than 10 years. 

Specifically, FSUTX has returned 8.9% and 9.4% in the past three and five-year period, respectively.

Virtus AllianzGI Water Fund Class A (AWTAX) aims for capital growth over a long period of time. The fund invests majority of its assets in securities of companies that are included on the S&P Global Water Index, the Nasdaq OMX US Water or Global Water Indices or the S-Network Global Water Index. AWTAX is a non-diversified fund.

This Zacks Sector – Utilities has a history of positive total returns for more than 10 years. 

Specifically, AWTAX has returned 17.8% and 13.3% in the past three and five-year period, respectively.