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Is Fidelity Mid Cap Enhance Index Fund (FMEIX) a Strong Mutual Fund Pick Right Now?

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If you're looking for an Index fund category, then a possible option is Fidelity Mid Cap Enhance Index Fund . While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

FMEIX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Mid Cap Enhance Index Fund made its debut in January of 2008 and FMEIX has managed to accumulate roughly $1.21 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 7.69%, 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 11.15%, 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. FMEIX's standard deviation over the past three years is 13.75% compared to the category average of 7.75%. Over the past 5 years, the standard deviation of the fund is 13.04% compared to the category average of 8.86%. 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.

Even still, the fund has a 5-year beta of 1.02, so investors should note that it is hypothetically as volatile as 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. The fund has produced a negative alpha over the past 5 years of -2.8, which shows that 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 principally on equities that are traded in the United States.

Right now, 75.45% of this mutual fund's holdings are stocks, which have an average market capitalization of $16.63 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
Turnover is about 78%, so those in charge of the fund make more trades per year than the comparable 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, FMEIX is a no load fund. It has an expense ratio of 0.59% compared to the category average of 0.76%. FMEIX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Your research on the Index 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. 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.

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