Back to top

Image: Bigstock

Is Fidelity Real Estate Income (FRIFX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Sector - Real Estate fund seekers should consider taking a look at Fidelity Real Estate Income (FRIFX - Free Report) . FRIFX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FRIFX is one of many Sector - Real Estate funds to choose from. Sector - Real Estate mutual funds are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. This technique makes securities in these funds high dividend players, and even bond-like in some instances, though their risk is similar to equities.

History of Fund/Manager

Fidelity is responsible for FRIFX, and the company is based out of Boston, MA. Fidelity Real Estate Income made its debut in February of 2003, and since then, FRIFX has accumulated about $2.80 billion in assets, per the most up-to-date date available. The fund is currently managed by Mark Snyderman who has been in charge of the fund since February of 2003.

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 7.1%, and is in the middle 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 8.95%, 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 FRIFX over the past three years is 17.16% compared to the category average of 18.69%. The fund's standard deviation over the past 5 years is 13.48% compared to the category average of 15.75%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FRIFX has a 5-year beta of 0.63, which means it is likely to be less 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. FRIFX has generated a negative alpha over the past five years of -3.04, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, FRIFX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 1.22%. So, FRIFX is actually cheaper than its peers from a cost perspective.

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 Real Estate Income ( FRIFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on FRIFXin the Sector - Real Estate 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


FIDELITY REAL ESTATE INC FD (FRIFX) - free report >>

Published in