On the lookout for a Sector – Finance fund? Starting with Fidelity Select Financial Services (FIDSX) is one possibility. FIDSX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
FIDSX is one of many Sector – Finance funds to choose from. Sector – Finance mutual funds provide investors with a diversified and stabilized investment approach focused on the financial space, which is a notoriously large, complex, and heavily-regulated industry. These funds include everything from insurance companies and exchanges to banks and investment giants; interest rates can impact the players of this space as well.
History of Fund/Manager
Fidelity is responsible for FIDSX, and the company is based out of Boston, MA. Fidelity Select Financial Services debuted in December of 1981. Since then, FIDSX has accumulated assets of about $851.04 million, according to the most recently available information. The fund is currently managed by Matt Reed who has been in charge of the fund since June of 2019.
Investors naturally seek funds with strong performance. FIDSX has a 5-year annualized total return of 15.33% and is in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 12.47%, 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. Over the past three years, FIDSX’s standard deviation comes in at 26.44%, compared to the category average of 27.22%. The standard deviation of the fund over the past 5 years is 21.78% compared to the category average of 22.37%. This makes the fund less volatile than its peers over the past half-decade.
With a 5-year beta of 1.23, the fund is likely to be more volatile than the market average. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a negative alpha over the past 5 years of -4.16, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 mostly on equities that are traded in the United States.
Currently, this mutual fund is holding 85.82% stock in stocks, which have an average market capitalization of $79.30 billion. This fund’s turnover is about 63%, so the fund managers are making fewer trades than the average comparable fund.
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, FIDSX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1.53%. Looking at the fund from a cost perspective, FIDSX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Overall, Fidelity Select Financial Services ( FIDSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Select Financial Services ( FIDSX ) looks like a good potential choice for investors right now.
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