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Is Fidelity Select Technology (FSPTX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Sector - Tech fund could think about starting with Fidelity Select Technology (FSPTX - Free Report) . FSPTX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FSPTX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.

History of Fund/Manager

FSPTX is a part of the Fidelity family of funds, a company based out of Boston, MA. Since Fidelity Select Technology made its debut in July of 1981, FSPTX has garnered more than $6.44 billion in assets. The fund is currently managed by Nidhi Gupta who has been in charge of the fund since July of 2018.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 19.94%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 27.33%, 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. The standard deviation of FSPTX over the past three years is 17.38% compared to the category average of 17.16%. The fund's standard deviation over the past 5 years is 16.89% compared to the category average of 17.08%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, FSPTX lost 59.27% and underperformed its peer group by 5%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.21, which means it is hypothetically more volatile than the market at large. 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. FSPTX's 5-year performance has produced a positive alpha of 5.82, which means managers in this portfolio are skilled in picking 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 mostly on equities that are traded in the United States.

As of the last filing date, the mutual fund has 94.38% of its assets in stocks, which have an average market capitalization of $455.74 billion. Turnover is 126%, which means, on average, the fund makes fewer trades than the average comparable fund.

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, FSPTX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 1.39%. So, FSPTX 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 Select Technology ( FSPTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Tech, make sure to go to www.zacks.com/funds/mutual-funds 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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