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The consumer sector is currently experiencing a robust run. Among the S&P 500 industry groups, the Consumer Discretionary (NYSEARCA: XLY ) has the best gains in the past 6 months and the second best gains year to date. The consumer sector’s strong performance comes at a time when many others are finding it tough to fight market volatility. For example, Utilities, Energy and Industrials are down for the year so far. The consumer sector is having a good run on the back of moderate economic recovery, better job prospects, improved business and renewed optimism. Rising wages and cheaper fuel are the other positives. Commodity costs have in many cases stabilized. Consumers are also expecting lower inflation primarily due to lower gas prices. A decline in commodity prices may improve profit margins for certain staples companies. To help the momentum, recent consumer data including retail sales and consumer sentiment have been very encouraging. Amid the positives, let’s look into some mutual funds that are focused on the retail or consumer sector. Consumer Sentiment Improves The University of Michigan and Thomson Reuters’ preliminary reading of consumer sentiment was at 94.6 in June. This was more than the consensus forecast of an increase to 91.2 as well last month’s figure of 90.7. This encouraging report comes despite an increase in petroleum prices. Higher petroleum prices in turn fueled an increase in PPI for the month of May. PPI gained 0.5% in May, more than the consensus estimate of an increase by 0.4%. This was the highest increase recorded in more than 36 months. Retail Sales, Consumer Credit Rise Retail sales increased 1.2% in May from the previous month to $444.9 billion. This rate of growth was significantly higher than April’s revised gain of 0.2%. The auto sector, which accounts for around 20% of retail sales, was one of the main catalysts behind the surge. May’s figure increased 2.7% from the year-ago level. Meanwhile, March’s gain was revised upward to 1.5%, marking the highest monthly gain in almost five years. Sales in the auto sector also played an important role in boosting sales in May. Sales at motor vehicle & parts dealers rose 2% from the previous month, compared to 0.7% rise in April. It surged 8.2% from year-ago level. The auto industry witnessed its best May ever in terms of light vehicle sales. Strong demand for light trucks along with crossovers and SUVs boosted auto sales in May. Low level of oil prices and a low-rate environment helped the auto sector to register strong gains. Additionally, another report revealed consumer credit increased at a seasonally adjusted annual rate of 7.25% in April. Non-revolving credit increased at an annual rate of 5.75%. Revolving credit also increased at an annual rate of 11.5%. 3 Mutual Funds to Buy Below we present 4 mutual funds focused on retail or consumer sector that either a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy) as we expect the funds to outperform its 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 the likely future success of the fund. They also have encouraging year-to-date and 3 and 5-year annualized returns. The minimum initial investment is within $5000 and they carry no sales load. The Fidelity Select Retailing Portfolio (MUTF: FSRPX ) invests a minimum of 80% of its assets in securities of firms involved in merchandising finished goods and services to consumers. FSRPX currently carries a Zacks Mutual Fund Rank #1 and has year-to-date and 1-year gains of 6.6% and 23.7%. The 3 and 5 year annualized gains stand at 22.5% and 21.1%. The annual expense ratio of 0.81% is lower than category average of 1.48%. The Rydex Retailing Fund (MUTF: RYRAX ) seeks growth of capital. RYRAX invests almost all its assets in equities of US-traded retail companies. Apart from investing in small to mid-cap retailing companies, RYRAX may also buy ADRs to get exposure to foreign retailers. RYRAX may also invest in derivatives and US government securities. RYRAX currently carries a Zacks Mutual Fund Rank #2 and has year-to-date and 1-year gains of 6% and 17.9%. The 3 and 5 year annualized gains stand at 18% and 17.7%. The annual expense ratio of 1.83% is however higher than category average of 1.48%. The Fidelity Select Consumer Discretionary Portfolio ‘s (MUTF: FSCPX ) objective is capital appreciation. FSCPX normally invests at least 80% of its assets in companies mostly involved in the manufacture and distribution of consumer discretionary products and services. FSCPX currently carries a Zacks Mutual Fund Rank #1 and has a year-to-date and 1-year gains of 5.3% and 15.3%. The 3 and 5 year annualized gains stand at 20.5% and 18.2%. The annual expense ratio of 0.79% is lower than category average of 1.48%. Separately, investors may also focus on Putnam Global Consumer Fund A (MUTF: PGCOX ) and ICON Consumer Staples Fund A (MUTF: ICRAX ), both carrying a Zacks Mutual Fund Rank #3 (Hold). PGCOX has gained 8.8% over the last one year and its 3 and 5 year annualized gains stand at 17.4% and 15.2%. ICRAX’s 1-year gain is 11.5%, whereas the 3 and 5 year annualized gains stand at 12.8% and 7.4%. Originally published on Zacks.com