We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Fidelity Select Technology (FSPTX) a Strong Mutual Fund Pick Right Now?
Read MoreHide Full Article
Having trouble finding a Sector - Tech fund? Well, Fidelity Select Technology (FSPTX - Free Report) would not be a good potential starting point right now. FSPTX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FSPTX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FSPTX. Fidelity Select Technology debuted in July of 1981. Since then, FSPTX has accumulated assets of about $4.56 billion, according to the most recently available information. The fund is currently managed by Charlie Chai who has been in charge of the fund since January of 2007.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 12.7%, and it sits 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 15.22%, 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. Compared to the category average of 16.24%, the standard deviation of FSPTX over the past three years is 17.2%. The standard deviation of the fund over the past 5 years is 15.83% compared to the category average of 15.86%. This makes the fund less 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 FSPTX's case, the fund lost 59.27% in the most recent bear market and underperformed comparable funds by 5.96%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 1.17, the fund is likely to be more volatile than the market average. 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. The fund has produced a positive alpha over the past 5 years of 3.16, which shows that managers in this portfolio are skilled in picking 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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 94.86% of its assets in stocks, which have an average market capitalization of $329.14 billion. Turnover is 71%, which means this fund makes fewer trades than its comparable peers.
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, FSPTX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 1.31%. Looking at the fund from a cost perspective, FSPTX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Select Technology ( FSPTX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Sector - Tech 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 FSPTX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Fidelity Select Technology (FSPTX) a Strong Mutual Fund Pick Right Now?
Having trouble finding a Sector - Tech fund? Well, Fidelity Select Technology (FSPTX - Free Report) would not be a good potential starting point right now. FSPTX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FSPTX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FSPTX. Fidelity Select Technology debuted in July of 1981. Since then, FSPTX has accumulated assets of about $4.56 billion, according to the most recently available information. The fund is currently managed by Charlie Chai who has been in charge of the fund since January of 2007.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 12.7%, and it sits 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 15.22%, 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. Compared to the category average of 16.24%, the standard deviation of FSPTX over the past three years is 17.2%. The standard deviation of the fund over the past 5 years is 15.83% compared to the category average of 15.86%. This makes the fund less 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 FSPTX's case, the fund lost 59.27% in the most recent bear market and underperformed comparable funds by 5.96%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 1.17, the fund is likely to be more volatile than the market average. 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. The fund has produced a positive alpha over the past 5 years of 3.16, which shows that managers in this portfolio are skilled in picking 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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 94.86% of its assets in stocks, which have an average market capitalization of $329.14 billion. Turnover is 71%, which means this fund makes fewer trades than its comparable peers.
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, FSPTX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 1.31%. Looking at the fund from a cost perspective, FSPTX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Select Technology ( FSPTX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Sector - Tech 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 FSPTX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.