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Is Fidelity Overseas Fund (FOSFX) a Strong Mutual Fund Pick Right Now?

If investors are looking at the Non US - Equity fund category, Fidelity Overseas Fund (FOSFX) could be a potential option. FOSFX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes FOSFX 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 based in Boston, MA, and is the manager of FOSFX. The Fidelity Overseas Fund made its debut in December of 1984 and FOSFX has managed to accumulate roughly $5.75 billion in assets, as of the most recently available information. Vincent Montemaggiore is the fund's current manager and has held that role since January of 2012.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FOSFX has a 5-year annualized total return of 4.43% 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 4.58%, which places it in the middle 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, FOSFX's standard deviation comes in at 11.44%, compared to the category average of 10.56%. The standard deviation of the fund over the past 5 years is 11.3% compared to the category average of 10.65%. 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. FOSFX lost 60.24% in the most recent bear market and underperformed comparable funds by 1.82%. 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 0.89, which means it is hypothetically less volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -4.84, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, FOSFX is a no load fund. It has an expense ratio of 0.98% compared to the category average of 1.25%. From a cost perspective, FOSFX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.

Bottom Line

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

Want even more information about FOSFX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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