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Is Fidelity Total Market Index Adviser (FSTVX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Index funds, consider Fidelity Total Market Index Adviser (FSTVX) as a possibility. FSTVX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

FSTVX is a part of the Fidelity family of funds, a company based out of Boston, MA. Since Fidelity Total Market Index Adviser made its debut in October of 2005, FSTVX has garnered more than $30.14 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. FSTVX has a 5-year annualized total return of 14.2% 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 15.83%, 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. FSTVX's standard deviation over the past three years is 9.6% compared to the category average of 8.79%. Over the past 5 years, the standard deviation of the fund is 9.71% compared to the category average of 8.68%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. FSTVX lost 50.95% in the most recent bear market and outperformed its peer group by 4.4%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 1.01, so investors should note that it is hypothetically as volatile as 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. FSTVX's 5-year performance has produced a negative alpha of -0.33, 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 mostly on equities that are traded in the United States.

This fund is currently holding about 83.21% stock in stocks, and these companies have an average market capitalization of $176.79 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Industrial Cyclical

This fund's turnover is about 2%, so the fund managers are making fewer trades than its comparable peers.

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, FSTVX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 0.85%. Looking at the fund from a cost perspective, FSTVX is actually cheaper than its peers.

While the minimum initial investment for the product is $10,000, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

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