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Is Fidelity Advisor Biotechnology A (FBTAX) a Strong Mutual Fund Pick Right Now?

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Sector - Health fund seekers should not consider taking a look at Fidelity Advisor Biotechnology A (FBTAX - Free Report) at this time. FBTAX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes FBTAX as Sector - Health, a segment packed with options. Sector - Health mutual funds offer investors a focus on the healthcare industry, one of the largest sectors in the American economy. These funds can include everything from pharmaceutical companies to medical device manufacturers and for-profit hospitals.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FBTAX. The Fidelity Advisor Biotechnology A made its debut in December of 2000 and FBTAX has managed to accumulate roughly $691.85 million in assets, as of the most recently available information. The fund's current manager, Eirene Kontopoulos, has been in charge of the fund since July of 2018.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 8.98%, and is 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 0.51%, 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 FBTAX over the past three years is 26.83% compared to the category average of 10.59%. The standard deviation of the fund over the past 5 years is 25.88% compared to the category average of 10.68%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, FBTAX lost 26.12% and outperformed its peer group by 7.12%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.43, which means it is hypothetically more 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 negative alpha of -3.42, 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 largely on equities that are traded in the United States.

Right now, 76.78% of this mutual fund's holdings are stocks, which have an average market capitalization of $45.74 billion. The fund has the heaviest exposure to the following market sectors:

  1. Health
  2. Other
Turnover is about 45%, so those in charge of the fund make fewer trades than the average comparable fund.

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, FBTAX is a load fund. It has an expense ratio of 1.06% compared to the category average of 1.32%. FBTAX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Advisor Biotechnology A ( FBTAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Fidelity Advisor Biotechnology A ( FBTAX ) looks like a somewhat weak choice for investors right now.

Don't stop here for your research on Sector - Health funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FBTAX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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