Any investors hoping to find a Sector - Real Estate fund could think about starting with Fidelity Real Estate Income (FRIFX). FRIFX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
FRIFX is one of many Sector - Real Estate funds to choose from. Sector - Real Estate mutual funds are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. This technique makes securities in these funds high dividend players, and even bond-like in some instances, though their risk is similar to equities.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FRIFX. Since Fidelity Real Estate Income made its debut in February of 2003, FRIFX has garnered more than $2.73 billion in assets. The fund is currently managed by Mark Snyderman who has been in charge of the fund since February of 2003.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 6.72%, and is in the middle 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 7.34%, 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. The standard deviation of FRIFX over the past three years is 5.45% compared to the category average of 11.94%. Looking at the past 5 years, the fund's standard deviation is 5.46% compared to the category average of 12.71%. This makes the fund less volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, FRIFX lost 34.98% and outperformed its peer group by 28.92%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Even still, the fund has a 5-year beta of 0.29, so investors should note that it is hypothetically less volatile than the market at large. 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. FRIFX's 5-year performance has produced a positive alpha of 2.92, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FRIFX is a no load fund. It has an expense ratio of 0.75% compared to the category average of 1.22%. From a cost perspective, FRIFX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Overall, Fidelity Real Estate Income ( FRIFX ) has a neutral Zacks Mutual Fund rank, similar performance, better downside risk, and lower fees compared to its peers.
Your research on the Sector - Real Estate 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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