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Is Fidelity Select Transportation (FSRFX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Sector - Other fund could think about starting with Fidelity Select Transportation (FSRFX - Free Report) . FSRFX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

FSRFX finds itself in the Fidelity family, based out of Boston, MA. Fidelity Select Transportation made its debut in September of 1986, and since then, FSRFX has accumulated about $312.44 million in assets, per the most up-to-date date available. The fund is currently managed by Matthew Moulis who has been in charge of the fund since January of 2012.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FSRFX has a 5-year annualized total return of 3.11% 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 2.46%, 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 15.21%, the standard deviation of FSRFX over the past three years is 19.03%. The standard deviation of the fund over the past 5 years is 17.98% compared to the category average of 15.03%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. FSRFX lost 51.98% in the most recent bear market and underperformed its peer group by 2%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FSRFX has a 5-year beta of 1.19, which means it is likely to be more volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -6.33, which shows 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 primarily on equities that are traded in the United States.

The mutual fund currently has 82.9% of its holdings in stocks, and these companies have an average market capitalization of $53.05 billion. Turnover is about 32%, so those in charge of the fund make 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, FSRFX is a no load fund. It has an expense ratio of 0.80% compared to the category average of 1.30%. Looking at the fund from a cost perspective, FSRFX is actually cheaper than its peers.

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 Select Transportation ( FSRFX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on FSRFXin the Sector - Other category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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