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Is Fidelity Select Brokerage and Investment Management (FSLBX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

If you have been looking for Sector - Finance funds, a place to start could be Fidelity Select Brokerage and Investment Management (FSLBX). FSLBX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FSLBX is part of the Sector - Finance section, which boasts an array of other possible selections. Sector - Finance funds offer a stable, diversified approach to investing that focuses on the financial industry, an infamously large, complex, and heavily-regulated space. Funds here can include insurance companies and exchanges, as well as banks and investment giants. Investors should note that interest rates may also impact players in this market.

History of Fund/Manager

Fidelity is responsible for FSLBX, and the company is based out of Boston, MA. Fidelity Select Brokerage and Investment Management made its debut in July of 1985, and since then, FSLBX has accumulated about $322.17 million in assets, per the most up-to-date date available. The fund is currently managed by Charlie Ackerman who has been in charge of the fund since November of 2018.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 6.4%, and is 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 15.2%, 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. Over the past three years, FSLBX's standard deviation comes in at 15.37%, compared to the category average of 17.14%. Looking at the past 5 years, the fund's standard deviation is 17.43% compared to the category average of 16.46%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

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 FSLBX's case, the fund lost 59.95% in the most recent bear market and outperformed its peer group by 1%. This means that the fund could possibly be a better choice than its peers during a down 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. FSLBX has a 5-year beta of 1.14, which means it is likely to be more 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. FSLBX's 5-year performance has produced a negative alpha of -5.09, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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 primarily on equities that are traded in the United States.

Currently, this mutual fund is holding 76.71% stock in stocks, which have an average market capitalization of $35.37 billion. With turnover at about 30%, this fund makes fewer trades than the average comparable fund.

Expenses

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, FSLBX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1.41%. FSLBX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Select Brokerage and Investment Management ( FSLBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Select Brokerage and Investment Management ( FSLBX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Finance, make sure to go to www.zacks.com/funds/mutual-funds 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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