On the lookout for a Sector - Real Estate fund? Starting with Fidelity Real Estate Income (FRIFX) should not be a possibility at this time. FRIFX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
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 finds itself in the Fidelity family, based out of Boston, MA. Fidelity Real Estate Income debuted in February of 2003. Since then, FRIFX has accumulated assets of about $2.55 billion, according to the most recently available information. The fund is currently managed by Mark P. Snyderman who has been in charge of the fund since February of 2003.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.14%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.81%, 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. Compared to the category average of 11.73%, the standard deviation of FRIFX over the past three years is 4.83%. Looking at the past 5 years, the fund's standard deviation is 5.16% compared to the category average of 12.24%. This makes the fund less 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. FRIFX lost 34.97% in the most recent bear market and outperformed its peer group by 28.98%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 0.23, so investors should note that it is hypothetically less 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. The fund has produced a positive alpha over the past 5 years of 2.35, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FRIFX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1.25%. So, FRIFX 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 Real Estate Income has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Fidelity Real Estate Income looks like a somewhat weak choice for investors right now.
This could just be the start of your research on FRIFX in the Sector - Real Estate category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.