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Is Fidelity Select Health Care Services (FSHCX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Sector - Health funds, consider Fidelity Select Health Care Services (FSHCX) as a possibility. FSHCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Sector - Health funds is an area filled with options, such as FSHCX. Healthcare is one of the biggest sectors of the American economy, and Sector - Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FSHCX. Since Fidelity Select Health Care Services made its debut in June of 1986, FSHCX has garnered more than $1.47 billion in assets. Justin Segalini is the fund's current manager and has held that role since January of 2016.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 14.9%, and it sits 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 18.33%, 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. FSHCX's standard deviation over the past three years is 16.74% compared to the category average of 18.24%. The standard deviation of the fund over the past 5 years is 15.24% compared to the category average of 17.57%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. FSHCX lost 49.42% in the most recent bear market and underperformed comparable funds by 16.18%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 0.98, so it is likely going to be as volatile as 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. FSHCX has generated a positive alpha over the past five years of 4.41, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, FSHCX is a no load fund. It has an expense ratio of 0.74% compared to the category average of 1.29%. From a cost perspective, FSHCX 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 Select Health Care Services ( FSHCX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

This could just be the start of your research on FSHCXin the Sector - Health 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. 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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