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Is Fidelity Select Medical Equipment & Systems (FSMEX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Sector - Health funds, a place to start could be Fidelity Select Medical Equipment & Systems (FSMEX). FSMEX carries 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 FSMEX is a Sector - Health fund, and this area is also loaded with various options. Sector - Health mutual funds give investors an opportunity to focus on one of the largest sectors of the American economy, healthcare. Funds in this category can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

Fidelity is responsible for FSMEX, and the company is based out of Boston, MA. Since Fidelity Select Medical Equipment & Systems made its debut in April of 1998, FSMEX has garnered more than $6.69 billion in assets. Edward L. Yoon is the fund's current manager and has held that role since May of 2007.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 17.09%, and is 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 23.66%, 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 FSMEX over the past three years is 15.36% compared to the category average of 17.26%. The fund's standard deviation over the past 5 years is 15.38% compared to the category average of 17.71%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In FSMEX's case, the fund lost 27.95% in the most recent bear market and outperformed its peer group by 6%. This might suggest that the fund is a better choice than its peers during a bear market.

Even still, the fund has a 5-year beta of 0.92, so investors should note that it is hypothetically less 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. With a positive alpha of 6.91, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FSMEX is a no load fund. It has an expense ratio of 0.72% compared to the category average of 1.36%. Looking at the fund from a cost perspective, FSMEX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Select Medical Equipment & Systems ( FSMEX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Want even more information about FSMEX? 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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