Biden's Infrastructure Deal Set to Boost These 4 Mutual Funds

President Joe Biden announced a major infrastructure deal after meeting with a bipartisan group of senators on Jun 24. This nearly $1-trillion bill will be focused on improving America’s roads, bridges and broadband infrastructure. Per the report, 11 Republicans and 10 Democrats have supported the infrastructure deal so far though 60 votes are still required to pass the bill in the Senate, which is held by the Democrats.

Per a CNBC article, the White House has reported that $579 billion in new spending is included in the infrastructure bill. Specifically, of the aforementioned amount, nearly $312 billion will be assigned for transportation, of which $109 billion will be invested in roads, bridges and other major projects, while $66 billion in passenger and freight rail and $49 billion in public transit.

The bipartisan group, however, has only approved $15 billion toward electric vehicle infrastructure and electric buses and transit, which is a fraction of what Biden proposed earlier. However, the group plans to put $266 billion into non-transportation infrastructure, which includes $73 billion in power, $65 billion in broadband and $55 billion in water. Hence, utility companies planning to flip to alternative/green energy stands in a good spot along with those companies engaged in 5G rollout.

While U.S. lawmakers have worked for weeks to draft an infrastructure package, it still needs to get support from both parties and the Congress’ approval. So far, only a portion of the massive deal has been decided upon. Furthermore, the group has talked on various methods to pay for the ginormous bill and agreed on not including increased gas tax or electric vehicle user fee, or corporate tax rate hike, which were earlier opposed by the Democrats and Republicans. The deal also calls to increase IRS enforcement to make sure that wealthy people pay their taxes and also proposes private-public partnerships and bonds. Also, unused state and local coronavirus relief funds will be redirected to the infrastructure bill.

4 Funds to Play

While 60 votes are still required to pass the bill in the Senate, which is held by the Democrats, the bill definitely provides an opportunity for utilities, infrastructure, communications mutual funds. All the funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to grow and these funds 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. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Specifically, FRESX has returned 10.2% and 6.9% over the past three and five years, 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. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Specifically, FSUTX has returned 9.6% and 10.3% in the past three and five-year period, 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. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Specifically, FSRFX has returned 12.5% and 16.2% over the past three and five-year period, respectively.

New Alternatives Fund Class A NALFX seeks long-term capital growth with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities, such as real estate investment trusts and American Depository Receipts.

This Zacks sector – Other –product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Specifically, NALFX has three and five-year returns of 29.4% and 20.8%, respectively.

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