Is Fidelity Select Portfolio Medical Technology and Devices (FSMEX) a Strong Mutual Fund Pick Right Now?
Having trouble finding a Sector - Health fund? Fidelity Select Portfolio Medical Technology and Devices (FSMEX) is a potential starting point. FSMEX bears 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 FSMEX 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
FSMEX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Select Portfolio Medical Technology and Devices made its debut in April of 1998 and FSMEX has managed to accumulate roughly $5.39 billion in assets, as of the most recently available information. The fund is currently managed by Edward Yoon who has been in charge of the fund since May of 2007.
Performance
Investors naturally seek funds with strong performance. FSMEX has a 5-year annualized total return of 8.48% 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 -3.21%, 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 FSMEX over the past three years is 21.62%. Over the past 5 years, the standard deviation of the fund is 20.6% compared to the category average of 17.81%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FSMEX has a 5-year beta of 0.92, which means it is likely to be less volatile than the market average. 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 negative alpha of -4.86, 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, FSMEX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 1.13%. From a cost perspective, FSMEX 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.
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 Portfolio Medical Technology and Devices ( FSMEX ) 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. 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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