Is Fidelity Advisor Technology A (FADTX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Sector – Tech fund? Starting with Fidelity Advisor Technology A (FADTX) is one possibility. FADTX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

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Objective

The world of Sector – Tech funds is an area filled with options, and FADTX is one of them. Sector – Tech mutual funds allow investors to own a stake in a notoriously volatile sector with a much more diversified approach. Tech companies can be in any number of industries such as semiconductors, software, internet, networking just to name a few.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FADTX. Since Fidelity Advisor Technology A made its debut in September of 1996, FADTX has garnered more than $1.83 billion in assets. Adam Benjamin is the fund’s current manager and has held that role since July of 2020.

Performance

Investors naturally seek funds with strong performance. FADTX has a 5-year annualized total return of 33.79% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 31.63%, which places it in the top third during this time-frame.

When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 16.68%, the standard deviation of FADTX over the past three years is 23.31%. Looking at the past 5 years, the fund’s standard deviation is 19.62% compared to the category average of 13.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.12, the fund is likely to be more volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a positive alpha over the past 5 years of 12.52, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.

This fund is currently holding about 76.26% stock in stocks, with an average market capitalization of $504.92 billion. This fund’s turnover is about 59%, so the fund managers are making fewer trades than comparable funds.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FADTX is a load fund. It has an expense ratio of 0.99% compared to the category average of 1.35%. So, FADTX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Advisor Technology A ( FADTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Fidelity Advisor Technology A ( FADTX ) looks like a good potential choice for investors right now.

For additional information on the Sector – Tech area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FADTX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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