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Mutual Fund Commentary

Benchmarks largely continued their winning momentum through this year, tackling most of the international concerns. As of Dec 12, the year-to-date returns of Dow, Standard & Poor 500 (.INX) and Nasdaq stand at 4.3%, 8.3% and 11.4%, respectively. They boast 1-year returns of 9.7%, 12.8% and 16.3%.

International Concerns vs Domestic Strength

These gains have come amidst several global concerns, thanks to the strength in our country. From the very beginning of the year, geopolitical tensions looked threatening as the Russia-Ukraine crisis led to standoff with the Western countries and sanctions were imposed on Russia. Violence in the Middle East followed later, intensifying the political concerns. Election turmoil in Greece was also a headwind earlier this year. Meanwhile, key economies like China and the Eurozone have disappointed investor sentiment on many occasions because of their dismal economic reports. Japan too has failed to cheer investor mood as it entered into a technical recession.

However, the US has outperformed and tackled all these concerns. Economic data on most fronts have mostly been positive. The GDP looked fairly strong and so did the labor market. Meanwhile, the Federal Reserve has vowed to continue with the low rates, but ended its third quantitative easing program.

US Mutual Funds are Favored Option

The US mutual funds too have enjoyed solid gains. More interestingly, mutual funds dominate a significant portion of investment choices by US households. According to the recently published annual survey by the Investment Company Institute, about 53.2 million U.S. households and 90.4 million individual investors were the owners of mutual funds in mid-2014. The 44.3% of U.S. households owning shares of mutual funds and U.S. registered investment companies include closed-end funds and exchange-traded funds among others.

What is more promising for mutual funds is that its popularity has remained on the higher side. The popularity of mutual funds is reemphasized by the fact that favorability rating among shareholders for mutual fund companies has remained at 68% in mid-2014. (Read: Mutual Funds Enjoy Very Favorable Impression)

Fund Family: Fidelity Investments

Now, we will be looking at a fund family, Fidelity Investments this time, and which funds are its top performers.

Watch out for our Mutual Fund Commentary section in the coming days, where we will be reporting on performances and best picks from fund families.

With over $1,740.6 billion of mutual fund assets under management (as of Sep 30, 2014) and a wide variety of mutual funds spanning across a wide spectrum of sectors, Fidelity Investments is one of the largest mutual fund companies in the world. The company provides investment advice, discount brokerage services, retirement services, wealth management services, securities execution and clearance and life insurance products to its clients. At Fidelity, a large group of investment professionals carry out extensive and in-depth research to provide potential investment avenues worldwide for their investors.

Top Fidelity Funds

Here we will list the top 15 funds based on their year-to-date returns (as of Dec 12). The data is taken from Fidelity Investments website. However along side, we will mention the Zacks Mutual Fund Rank for each of these funds.


Source: Fidelity Investments

The highest return is thus from Fidelity Select Biotechnology Portfolio (FBIOX - MF report), belonging to the Healthcare sector. The next category is Real Estate, where Fidelity Spartan Real Estate Index Advantage (FSRVX - MF report) boasts year-to-date return of 29.7%. Both these and all other categories have outperformed returns of the overall US mutual fund industry categories. The chart below shows the category performance year to date (as of Dec 12).


Source: Morningstar

3 Fidelity Funds to Buy

Here we will be suggesting 3 top-ranked mutual funds from Fidelity. Apart from having high year-to-date returns, these funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy). Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.

They also relatively low expense ratio and none of these funds carry sales load. A maximum of $5000 is required as the minimum initial investment for these funds.

Fidelity Select Electronics Portfolio (FSELX - MF report) seeks capital growth. The fund invests a lion’s share of its assets in companies whose primary operations are related to electronic components, equipment vendors to electronic component manufacturers, electronic component distributors, and electronic instruments and electronic systems vendors. Investments are made in both domestic and foreign companies. The fund uses fundamental analysis to select companies for investment purposes.

The fund has returned 35.7% year to date. It carries an annual expense ratio of 0.79% as compared to category average of 1.51%.

Fidelity Select Health Care Portfolio (FSPHX - MF report) invests the majority of its assets in companies whose principal operations include production, design and sales of health care related products or services. The fund focuses on acquiring common stocks and invests in companies all over the globe.

The fund has returned 32.9% year to date. It carries an annual expense ratio of 0.76% as compared to category average of 1.43%.

Fidelity Series Real Estate Equity F (FREFX - MF report) seeks capital appreciation over the long term and above-average income. The fund invests a lion’s share of its assets equities primarily from the real estate industry or other real estate related investments. The fund aims to provide yield higher than that of the S& 500 Index’s composite yield. The fund invests in both domestic and non-US issuers.

The fund has returned 29.6% year to date. It carries an annual expense ratio of 0.59% as compared to category average of 1.34%.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.

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