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 Banking (FSRBX). FSRBX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
FSRBX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.
History of Fund/Manager
FSRBX is a part of the Fidelity family of funds, a company based out of Boston, MA. Since Fidelity Select Banking made its debut in June of 1986, FSRBX has garnered more than $394.76 million in assets. The fund is currently managed by Matt Reed who has been in charge of the fund since September of 2016.
Performance
Investors naturally seek funds with strong performance. FSRBX has a 5-year annualized total return of 16.25% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 8.42%, 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. FSRBX's standard deviation over the past three years is 28.4% compared to the category average of 23.83%. Looking at the past 5 years, the fund's standard deviation is 26.39% compared to the category average of 25.78%. 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 0.95, 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 3.34, 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, FSRBX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 1.25%. Looking at the fund from a cost perspective, FSRBX 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, Fidelity Select Banking ( FSRBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Select Banking ( FSRBX ) looks like a good potential choice for investors right now.
This could just be the start of your research on FSRBXin 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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This article originally published on Zacks Investment Research (zacks.com).
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