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Is Fidelity Advisor Financial Services A (FAFDX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Sector - Finance category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Advisor Financial Services A (FAFDX - Free Report) . FAFDX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FAFDX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.

History of Fund/Manager

FAFDX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Advisor Financial Services A made its debut in September of 1996 and FAFDX has managed to accumulate roughly $91 million in assets, as of the most recently available information. The fund's current manager, Matt Reed, has been in charge of the fund since June of 2019.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of -0.17%, and it sits 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 -4.96%, 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. FAFDX's standard deviation over the past three years is 22.41% compared to the category average of 15.06%. The standard deviation of the fund over the past 5 years is 19.59% compared to the category average of 13.74%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In FAFDX's case, the fund lost 69.81% in the most recent bear market and underperformed its peer group by 7%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.28, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. FAFDX's 5-year performance has produced a negative alpha of -7.1, which means 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 largely on equities that are traded in the United States.

This fund is currently holding about 98.01% stock in stocks, which have an average market capitalization of $70.92 billion. With turnover at about 85%, this fund makes fewer trades than its comparable peers.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FAFDX is a load fund. It has an expense ratio of 1.07% compared to the category average of 1.57%. Looking at the fund from a cost perspective, FAFDX is actually cheaper than its peers.

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 Advisor Financial Services A ( FAFDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Fidelity Advisor Financial Services A ( FAFDX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Sector - Finance 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 FAFDX 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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