Is Fidelity Select Biotechnology (FBIOX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Sector - Health funds, consider Fidelity Select Biotechnology (FBIOX) as a possibility. FBIOX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FBIOX as Sector - Health, a segment packed with options. Sector - Health mutual funds offer investors a focus on the healthcare industry, one of the largest sectors in the American economy. These funds can include everything from pharmaceutical companies to medical device manufacturers and for-profit hospitals.
History of Fund/Manager
FBIOX is a part of the Fidelity family of funds, a company based out of Boston, MA. Fidelity Select Biotechnology debuted in December of 1985. Since then, FBIOX has accumulated assets of about $4.60 billion, according to the most recently available information. The fund's current manager, Rajiv Kaul, has been in charge of the fund since October of 2005.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 8.83%, and is in the bottom 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 -6.72%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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 17.21%, the standard deviation of FBIOX over the past three years is 20.68%. The fund's standard deviation over the past 5 years is 23.07% compared to the category average of 18.18%. 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 0.73, which means it is hypothetically less volatile than the market at large. 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. The fund has produced a negative alpha over the past 5 years of -1.39, which shows that managers in this portfolio find it difficult to pick 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, FBIOX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 1.12%. Looking at the fund from a cost perspective, FBIOX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, average downside risk, and lower fees, Fidelity Select Biotechnology ( FBIOX ) has a high Zacks Mutual Fund rank, and therefore looks a great potential choice for investors right now.
Your research on the Sector - Health segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (FBIOX): Fund Analysis Report
