Is Fidelity Latin American Fund (FLATX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Non US - Equity funds, consider Fidelity Latin American Fund (FLATX) as a possibility. FLATX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FLATX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.
History of Fund/Manager
FLATX finds itself in the Fidelity family, based out of Boston, MA. Since Fidelity Latin American Fund made its debut in April of 1993, FLATX has garnered more than $489.72 million in assets. William Pruett is the fund's current manager and has held that role since October of 2015.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of -2.01%, 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 9.67%, 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 9.53%, the standard deviation of FLATX over the past three years is 23.28%. Looking at the past 5 years, the fund's standard deviation is 23.64% compared to the category average of 9.99%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In FLATX's case, the fund lost 59.63% in the most recent bear market and underperformed comparable funds by 1.17%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FLATX has a 5-year beta of 0.78, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -8.27. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, FLATX is a no load fund. It has an expense ratio of 1.05% compared to the category average of 1.20%. FLATX is actually cheaper than its peers when you consider factors like cost.
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 Latin American Fund ( FLATX ) has a high Zacks Mutual Fund rank, weak performance, worse downside risk, and lower fees compared to its peers.
Want even more information about FLATX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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