Is Fidelity Select Transportation (FSRFX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Sector - Other funds, consider Fidelity Select Transportation FSRFX as a possibility. FSRFX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FSRFX. Fidelity Select Transportation made its debut in September of 1986, and since then, FSRFX has accumulated about $539.28 million in assets, per the most up-to-date date available. The fund's current manager, Matthew Moulis, has been in charge of the fund since January of 2012.
Performance
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 19.1%, and it sits in the top 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 7.78%, 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 13.19%, the standard deviation of FSRFX over the past three years is 15.85%. Looking at the past 5 years, the fund's standard deviation is 14.26% compared to the category average of 12.23%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In FSRFX's case, the fund lost 51.99% in the most recent bear market and underperformed its peer group by 3.21%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 1.07, so it is likely going to be more 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. FSRFX has generated a positive alpha over the past five years of 2.93, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Holdings
Investigating 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.
The mutual fund currently has 97.22% of its holdings in stocks, which have an average market capitalization of $47.50 billion. The fund has the heaviest exposure to the following market sectors:
Industrial Cyclical
Other
This fund's turnover is about 104%, so the fund managers are making fewer trades than its comparable peers.
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, FSRFX is a no load fund. It has an expense ratio of 0.82% compared to the category average of 1.19%. Looking at the fund from a cost perspective, FSRFX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Select Transportation has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Select Transportation looks like a good potential choice for investors right now.
This could just be the start of your research on FSRFX in the Sector - Other category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.
View All Zacks #1 Ranked Mutual Funds
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (FSRFX): Fund Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
