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Is Fidelity Advisor Technology I (FATIX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Sector - Tech funds, consider Fidelity Advisor Technology I (FATIX - Free Report) as a possibility. FATIX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Sector - Tech funds is an area filled with options, and FATIX is one of them. Sector - Tech mutual funds allow investors to own a stake in a notoriously volatile sector with a much more diversified approach. Tech companies can be in any number of industries such as semiconductors, software, internet, networking just to name a few.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FATIX. Fidelity Advisor Technology I made its debut in September of 1996, and since then, FATIX has accumulated about $767.50 million in assets, per the most up-to-date date available. The fund is currently managed by Nidhi Gupta who has been in charge of the fund since July of 2018.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 19.18%, and it sits 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 20.26%, 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 FATIX over the past three years is 20.25% compared to the category average of 14.37%. Over the past 5 years, the standard deviation of the fund is 18.78% compared to the category average of 13.2%. This makes the fund more 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. FATIX lost 59.65% in the most recent bear market and underperformed comparable funds by 6%. This might suggest that the fund is a worse choice than its peers during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.12, 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. The fund has produced a positive alpha over the past 5 years of 8.9, which shows that 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 largely on equities that are traded in the United States.

The mutual fund currently has 97.94% of its holdings in stocks, and these companies have an average market capitalization of $436.08 billion. This fund's turnover is about 42%, so the fund managers are making 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, FATIX is a no load fund. It has an expense ratio of 0.74% compared to the category average of 1.39%. So, FATIX is actually cheaper than its peers from a cost perspective.

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

Bottom Line

Overall, Fidelity Advisor Technology I ( FATIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Sector - Tech area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FATIX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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