Is Fidelity Latin American Fund (FLATX) a Strong Mutual Fund Pick Right Now?
Non US - Equity fund seekers should consider taking a look at Fidelity Latin American Fund (FLATX). FLATX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes FLATX as Non US - Equity, a segment stacked high with options. Non US - Equity mutual funds like to invest in companies outside of the United States, an important characteristic since global mutual funds are known to keep a good portion of their portfolio stateside. These kinds of funds can often extend across all cap levels, and will typically allocate their investments between emerging and developed markets.
History of Fund/Manager
Fidelity is responsible for FLATX, and the company is based out of Boston, MA. Fidelity Latin American Fund made its debut in April of 1993, and since then, FLATX has accumulated about $517.46 million in assets, per the most up-to-date date available. The fund is currently managed by William Pruett who has been in charge of the fund since October of 2015.
Of course, investors look for strong performance in funds. FLATX has a 5-year annualized total return of 2.24% and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 10.41%, 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. Over the past three years, FLATX's standard deviation comes in at 22.73%, compared to the category average of 10.3%. The standard deviation of the fund over the past 5 years is 23.3% compared to the category average of 10.42%. 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, FLATX lost 59.62% and underperformed its peer group by 1%. This might suggest that the fund is a worse choice than its peers during a bear market.
Investors should note that the fund has a 5-year beta of 0.7, so it is likely going to be less 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. With a negative alpha of -3.06, 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, FLATX is a no load fund. It has an expense ratio of 1.06% compared to the category average of 1.25%. Looking at the fund from a cost perspective, FLATX 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.
Overall, Fidelity Latin American Fund ( FLATX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and lower fees, this fund looks like a great potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Non US - Equity, 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.