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

There are plenty of choices in the Sector - Health category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Select Health Care Services (FSHCX). FSHCX has a Zacks Mutual Fund Rank of 2 (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

FSHCX is a part of the Fidelity family of funds, a company based out of Boston, MA. Fidelity Select Health Care Services made its debut in June of 1986, and since then, FSHCX has accumulated about $1.27 billion in assets, per the most up-to-date date available. The fund's current manager, Justin Segalini, has been in charge of the fund since January of 2016.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 16.95%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 17.67%, 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. The standard deviation of FSHCX over the past three years is 20.63% compared to the category average of 19.33%. The fund's standard deviation over the past 5 years is 18.25% compared to the category average of 17.4%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.83, 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 positive alpha of 2.67, 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 0.73% compared to the category average of 1.32%. From a cost perspective, FSHCX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Select Health Care Services ( FSHCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Select Health Care Services ( FSHCX ) looks like a good potential choice for investors right now.

Want even more information about FSHCX? 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. 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.

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