Is Fidelity Telecom/Utilities Fund (FIUIX) a Strong Mutual Fund Pick Right Now?

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Sector – Utilities fund seekers may want to consider taking a look at Fidelity Telecom/Utilities Fund (FIUIX). FIUIX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

– Zacks

Objective

Zacks categorizes FIUIX in Sector – Utilities, which is a segment packed with options. Known for its stability, the utility industry is perfect for investors seeking low risk. Sector – Utilities mutual funds focus on companies that provide essential services to millions of people on a daily basis: think electric power, gas distribution, and water supply.

History of Fund/Manager

FIUIX finds itself in the Fidelity family, based out of Boston, MA. Since Fidelity Telecom/Utilities Fund made its debut in November of 1987, FIUIX has garnered more than $978.21 million in assets. The fund’s current manager, Douglas Simmons, has been in charge of the fund since September of 2005.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 8.91%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 7.85%, 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. The standard deviation of FIUIX over the past three years is 13.9% compared to the category average of 14.79%. Looking at the past 5 years, the fund’s standard deviation is 11.89% compared to the category average of 12.97%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.54, so it is likely going to be less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. FIUIX has generated a negative alpha over the past five years of -0.89, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FIUIX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 1.23%. From a cost perspective, FIUIX 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.

Bottom Line

Overall, Fidelity Telecom/Utilities Fund ( FIUIX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Telecom/Utilities Fund ( FIUIX ) looks like a somewhat average choice for investors right now.

This could just be the start of your research on FIUIXin the Sector – Utilities category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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