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

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If you've been stuck searching for Sector - Real Estate funds, consider Fidelity Real Estate Income (FRIFX - Free Report) as a possibility. FRIFX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various 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

FRIFX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Real Estate Income made its debut in February of 2003 and FRIFX has managed to accumulate roughly $1.07 billion in assets, as of the most recently available information. The fund's current manager, Bill Maclay, has been in charge of the fund since March of 2019.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 10.35%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 2.35%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 9.82% compared to the category average of 12.09%. The fund's standard deviation over the past 5 years is 10.04% compared to the category average of 12.81%. 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 0.51, which means it is likely to be less 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. FRIFX has generated a negative alpha over the past five years of -0.31, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, FRIFX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.79%. From a cost perspective, FRIFX is actually cheaper than its peers.

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

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

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

Your research on the Sector - Real Estate 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. 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.


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