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On the lookout for a Sector - Finance fund? Starting with Fidelity Select Financial Services (FIDSX) is one possibility. FIDSX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FIDSX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FIDSX. The Fidelity Select Financial Services made its debut in December of 1981 and FIDSX has managed to accumulate roughly $498.88 million in assets, as of the most recently available information. The fund's current manager, Christopher T. Lee, has been in charge of the fund since May of 2013.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 7.25%, 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 11.21%, 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 15.98%, compared to the category average of 17.14%. The fund's standard deviation over the past 5 years is 15.06% compared to the category average of 16.46%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. FIDSX lost 68.21% in the most recent bear market and underperformed its peer group by 7%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 1.09, the fund is likely to be more volatile than the market average. 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. With a negative alpha of -3.09, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.