If you've been stuck searching for Sector - Finance funds, consider Fidelity Select Banking (FSRBX) as a possibility. FSRBX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
FSRBX is one of many Sector - Finance funds to choose from. Sector - Finance mutual funds provide investors with a diversified and stabilized investment approach focused on the financial space, which is a notoriously large, complex, and heavily-regulated industry. These funds include everything from insurance companies and exchanges to banks and investment giants; interest rates can impact the players of this space as well.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FSRBX. Fidelity Select Banking made its debut in June of 1986, and since then, FSRBX has accumulated about $494.42 million in assets, per the most up-to-date date available. The fund's current manager, Matt Reed, has been in charge of the fund since September of 2016.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FSRBX has a 5-year annualized total return of 9.12% 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 13.49%, 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 FSRBX over the past three years is 20.68% compared to the category average of 16.19%. Over the past 5 years, the standard deviation of the fund is 19.18% compared to the category average of 15.85%. This makes the fund more volatile than its peers over the past half-decade.
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, FSRBX lost 66.58% and underperformed its peer group by 5.08%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FSRBX has a 5-year beta of 1.26, which means it is likely to be more 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. FSRBX's 5-year performance has produced a negative alpha of -3.82, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, FSRBX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.42%. So, FSRBX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $2,500, investors should also note that there is no minimum for each subsequent investment.
Overall, Fidelity Select Banking ( FSRBX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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