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Is Fidelity Advisor Financial Services A (FAFDX) a Strong Mutual Fund Pick Right Now?

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Mutual Fund Equity Report fund seekers should consider taking a look at Fidelity Advisor Financial Services A (FAFDX - Free Report) . FAFDX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FAFDX. Fidelity Advisor Financial Services A debuted in September of 1996. Since then, FAFDX has accumulated assets of about $166.77 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.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 5.15%, and it sits 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 20.87%, 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 FAFDX over the past three years is 23.45% compared to the category average of 17.06%. Over the past 5 years, the standard deviation of the fund is 24.69% compared to the category average of 17.16%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.07, so it is likely going to be more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -4.89. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

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 82.62% stock in stocks, with an average market capitalization of $84.94 billion. This fund's turnover is about 46%, so the fund managers are making fewer trades than comparable funds.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FAFDX is a load fund. It has an expense ratio of 1.04% compared to the category average of 1.49%. From a cost perspective, FAFDX is actually cheaper than its peers.

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 Advisor Financial Services A ( FAFDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Mutual Fund Equity Report 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 FAFDX too 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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