Markets

Is Fidelity Select Banking (FSRBX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Sector - Finance fund category, a potential starting could be Fidelity Select Banking FSRBX . FSRBX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

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 $805.99 million in assets, per the most up-to-date date available. Matt Reed is the fund's current manager and has held that role since September of 2016.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 14.48%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.89%, 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. FSRBX's standard deviation over the past three years is 18.46% compared to the category average of 15.41%. Over the past 5 years, the standard deviation of the fund is 16.52% compared to the category average of 14.33%. 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. In FSRBX's case, the fund lost 66.58% in the most recent bear market and underperformed comparable funds by 5.96%. These results could imply that the fund is a worse choice than its peers during a sliding 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 1.11, which means it is likely to be more volatile than the market average. 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. The fund has produced a positive alpha over the past 5 years of 0.47, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining 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 primarily on equities that are traded in the United States.

Right now, 78.48% of this mutual fund's holdings are stocks, which have an average market capitalization of $61.50 billion. Turnover is 34%, which means, on average, the fund makes fewer trades than comparable funds.

Expenses

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 0.78% compared to the category average of 1.43%. So, FSRBX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $2,500, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Select Banking has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Finance, make sure to go to www.zacks.com/funds/mutual-funds 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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