Is Fidelity Advisor Technology I (FATIX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Sector - Tech category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Advisor Technology I (FATIX). FATIX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FATIX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.
History of Fund/Manager
Fidelity is responsible for FATIX, and the company is based out of Boston, MA. Fidelity Advisor Technology I made its debut in September of 1996, and since then, FATIX has accumulated about $652.38 million in assets, per the most up-to-date date available. Nidhi Gupta is the fund's current manager and has held that role since July of 2018.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 17.39%, 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 20.97%, 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 11.54%, the standard deviation of FATIX over the past three years is 17.17%. The standard deviation of the fund over the past 5 years is 16.69% compared to the category average of 11.52%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In FATIX's case, the fund lost 59.65% in the most recent bear market and underperformed its peer group by 6%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.19, so it is likely going to be more 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. FATIX's 5-year performance has produced a positive alpha of 4.65, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Holdings
Examining 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.
The mutual fund currently has 95.03% of its holdings in stocks, which have an average market capitalization of $432.52 billion. With turnover at about 169%, this fund is making fewer trades than the average comparable fund.
Expenses
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, FATIX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.39%. So, FATIX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Advisor Technology I ( FATIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Your research on the Sector - Tech 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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