Is Fidelity Select Energy Portfolio (FSENX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Sector - Energy fund category, Fidelity Select Energy Portfolio (FSENX) could be a potential option. FSENX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FSENX is one of many Sector - Energy funds to choose from. Sector - Energy mutual funds are comprised of various changing and hugely important industries throughout the massive global energy sector. Even though clean energy is beginning to pick up steam, oil and gas companies have the highest exposure, but carbon-based fuels will be the biggest group of assets in these funds.
History of Fund/Manager
Fidelity is responsible for FSENX, and the company is based out of Boston, MA. Since Fidelity Select Energy Portfolio made its debut in July of 1981, FSENX has garnered more than $1.18 billion in assets. The fund is currently managed by John Dowd who has been in charge of the fund since July of 2006.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of -5.73%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 0.23%, which places it in the middle 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, FSENX's standard deviation comes in at 21.81%, compared to the category average of 19.94%. The fund's standard deviation over the past 5 years is 22.62% compared to the category average of 21.53%. 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 the most recent bear market, FSENX lost 56.37% and underperformed its peer group by 1.04%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 1.17, the fund is likely to be more 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 -15.58. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, FSENX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.48%. FSENX 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 $2,500 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Select Energy Portfolio ( FSENX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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