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Is Fidelity Select Chemicals (FSCHX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Sector - Other fund? Fidelity Select Chemicals (FSCHX - Free Report) is a potential starting point. FSCHX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FSCHX. Fidelity Select Chemicals debuted in July of 1985. Since then, FSCHX has accumulated assets of about $786.84 million, according to the most recently available information. The fund's current manager, David Wagner, has been in charge of the fund since August of 2019.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FSCHX has a 5-year annualized total return of 10.64% and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 5.24%, 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 28.73%, the standard deviation of FSCHX over the past three years is 25.58%. The fund's standard deviation over the past 5 years is 21.16% compared to the category average of 23.31%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.21, 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. The fund has produced a negative alpha over the past 5 years of -8.06, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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.

This fund is currently holding about 83.31% stock in stocks, which have an average market capitalization of $53.88 billion. The fund has the heaviest exposure to the following market sectors:

  1. Industrial Cyclical
  2. Non-Durable
  3. Other
With turnover at about 50%, this fund is making 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, FSCHX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.27%. So, FSCHX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

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

Don't stop here for your research on Sector - Other 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 FSCHX 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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