Is Fidelity Select Insurance (FSPCX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Sector - Finance funds, consider Fidelity Select Insurance (FSPCX) as a possibility. FSPCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
FSPCX is part of the Sector - Finance section, which boasts an array of other possible selections. Sector - Finance funds offer a stable, diversified approach to investing that focuses on the financial industry, an infamously large, complex, and heavily-regulated space. Funds here can include insurance companies and exchanges, as well as banks and investment giants. Investors should note that interest rates may also impact players in this market.
History of Fund/Manager
Fidelity is responsible for FSPCX, and the company is based out of Boston, MA. Since Fidelity Select Insurance made its debut in December of 1985, FSPCX has garnered more than $222.43 million in assets. Peter Deutsch is the fund's current manager and has held that role since June of 2013.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 10.34%, 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 12.1%, 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 16.19%, the standard deviation of FSPCX over the past three years is 12.14%. The fund's standard deviation over the past 5 years is 12.77% compared to the category average of 15.85%. This makes the fund less volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In FSPCX's case, the fund lost 63.21% in the most recent bear market and underperformed its peer group by 1.71%. This might suggest that the fund is a worse choice than its peers during a bear market.
Nevertheless, with a 5-year beta of 0.98, the fund is likely to be as volatile as the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a negative alpha of -0.71, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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.
Currently, this mutual fund is holding 77.25% stock in stocks, which have an average market capitalization of $24.58 billion. Turnover is 21%, which means this fund makes fewer trades than the average comparable fund.
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 0.81% compared to the category average of 1.42%. So, FSPCX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $2,500, investors should also note that there is no minimum for each subsequent investment.
Overall, Fidelity Select Insurance ( FSPCX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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. 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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