Markets

Is Fidelity Select Insurance (FSPCX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Sector - Finance category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Select Insurance (FSPCX). FSPCX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FSPCX 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 FSPCX. The Fidelity Select Insurance made its debut in December of 1985 and FSPCX has managed to accumulate roughly $218.91 million in assets, as of the most recently available information. The fund's current manager, Peter Deutsch, has been in charge of the fund since June of 2013.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 8.63%, 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 7.38%, 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. Compared to the category average of 15.47%, the standard deviation of FSPCX over the past three years is 11.42%. The standard deviation of the fund over the past 5 years is 12.24% compared to the category average of 14.24%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

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, FSPCX lost 63.21% and outperformed its peer group by 2.59%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 1.03, 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. FSPCX's 5-year performance has produced a negative alpha of -2.55, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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 principally on equities that are traded in the United States.

As of the last filing date, the mutual fund has 77.97% of its assets in stocks, with an average market capitalization of $25.49 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Other

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, FSPCX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1.43%. From a cost perspective, FSPCX 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 Insurance ( FSPCX ) 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.

This could just be the start of your research on FSPCXin the Sector - Finance 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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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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