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Is Fidelity Select Brokerage and Investment Management (FSLBX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Sector - Finance fund? Starting with Fidelity Select Brokerage and Investment Management (FSLBX - Free Report) is one possibility. FSLBX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FSLBX 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 FSLBX. Fidelity Select Brokerage and Investment Management debuted in July of 1985. Since then, FSLBX has accumulated assets of about $446.18 million, according to the most recently available information. The fund's current manager, Daniel Dittler, has been in charge of the fund since July of 2015.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 14.42%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.77%, which places it in the middle 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 FSLBX over the past three years is 19.19% compared to the category average of 15.93%. Over the past 5 years, the standard deviation of the fund is 17.04% compared to the category average of 13.87%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In FSLBX's case, the fund lost 59.94% in the most recent bear market and outperformed its peer group by 0.68%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 1.45, so it is likely going to be more 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. FSLBX's 5-year performance has produced a negative alpha of -6.67, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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.

The mutual fund currently has 77.34% of its holdings in stocks, and these companies have an average market capitalization of $25.91 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Other

With turnover at about 146%, this fund makes more trades in a given year than the category average.

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, FSLBX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.45%. From a cost perspective, FSLBX is actually cheaper than its peers.

This fund requires a minimum initial investment of $2,500, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Select Brokerage and Investment Management has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Select Brokerage and Investment Management looks like a good potential choice for investors right now.

Your research on the Sector - Finance segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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