If investors are looking at the Sector - Health fund category, Fidelity Select Medical Equipment & Systems (FSMEX Quick QuoteFSMEX - Free Report) could be a potential option. FSMEX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FSMEX is a Sector - Health fund, and this area is also loaded with various options. Sector - Health mutual funds give investors an opportunity to focus on one of the largest sectors of the American economy, healthcare. Funds in this category can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FSMEX. Fidelity Select Medical Equipment & Systems made its debut in April of 1998, and since then, FSMEX has accumulated about $7.85 billion in assets, per the most up-to-date date available. The fund's current manager, Edward Yoon, has been in charge of the fund since May of 2007.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 21.28%, and it sits 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 22.21%, 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. FSMEX's standard deviation over the past three years is 19.04% compared to the category average of 18.77%. The standard deviation of the fund over the past 5 years is 16.91% compared to the category average of 17.97%. 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 0.83, which means it is hypothetically less volatile than the market at large. 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. With a positive alpha of 9.15, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, FSMEX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 1.35%. So, FSMEX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Select Medical Equipment & Systems ( FSMEX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Sector - Health 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 FSMEX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.