The recent fluctuations in U.S. Crude oil prices, influenced by geopolitical tensions, have raised concerns about inflation. Both U.S. Crude and Brent prices saw a 3% decline last week. Inflation, which had decreased last year, has resurfaced in 2024, with the Consumer Price Index (CPI) rising by 0.4% in March for the third consecutive month. Despite expectations of three rate cuts by the Federal Reserve by the end of the year, the recent increase in inflation has created uncertainty about the timing of these cuts.
Given the volatility and inflationary pressures in the market, consumer staples mutual funds have emerged as safe-haven assets that provide stability and resilience. These funds focus on goods and services, offering potential income generation. As such, we have identified three consumer staple mutual funds that are expected to protect your portfolio against economic downturns and deliver attractive returns. These mutual funds have a Zacks Mutual Fund Rank of #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments of $5000, and low expense ratios.
The Fidelity Advisor Consumer Staples (FDAGX) fund aims for capital growth by investing in companies that manufacture and market consumer staples products. Managed by Ben Shuleva since December 31, 2019, FDAGX’s top holdings include The Coca-Cola Co, The Procter & Gamble Co, and Keurig Dr Pepper Inc. As of November 30, 2023, the fund has generated 3-year and 5-year returns of 5.7% and 8.7%, respectively, with an annual expense ratio of 1%.
The Fidelity Select Consumer Staples Port (FDFAX) fund primarily invests in companies engaged in the manufacturing, marketing, or distribution of consumer staples products. Managed by Ben Shuleva since January 1, 2020, FDFAX’s top holdings mirror those of FDAGX. The fund has delivered 3-year and 5-year annualized returns of 6% and 9.1%, respectively, with a net expense ratio of 0.72%.
Lastly, the Fidelity Advisor Consumer Staples (FDIGX) fund invests in local and international issuers involved in the production, sale, or distribution of consumer staples. Managed by Ben Shuleva since December 31, 2019, FDIGX’s top holdings align with those of FDAGX and FDFAX. The fund has achieved 3-year and 5-year annualized returns of 5.9% and 9%, respectively, with a net expense ratio of 0.73%.
In conclusion, these consumer staple mutual funds offer a secure investment option in times of market volatility and inflationary pressures. Investors can consider these funds to diversify their portfolios and potentially generate attractive returns.