Sector – Health fund seekers should consider taking a look at Fidelity Select Portfolio Medical Technology and Devices (FSMEX). FSMEX possesses a Zacks Mutual Fund Rank of 2 (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
Fidelity is based in Boston, MA, and is the manager of FSMEX. Since Fidelity Select Portfolio Medical Technology and Devices made its debut in April of 1998, FSMEX has garnered more than $2.98 billion in assets. The fund’s current manager, Edward Yoon, has been in charge of the fund since May of 2007.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of -3.16%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -1.18%, 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. Over the past three years, FSMEX’s standard deviation comes in at 17.37%, compared to the category average of 16.08%. The standard deviation of the fund over the past 5 years is 19.14% compared to the category average of 16.86%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 0.93, the fund is likely to be less volatile than 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. FSMEX has generated a negative alpha over the past five years of -14.3, demonstrating 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, FSMEX is a no load fund. It has an expense ratio of 0.62% compared to the category average of 1.12%. From a cost perspective, FSMEX is actually cheaper than its peers.