Is Fidelity Real Estate Income (FRIFX) a Strong Mutual Fund Pick Right Now?
Sector – Real Estate fund seekers may want to consider taking a look at Fidelity Real Estate Income (FRIFX). FRIFX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FRIFX in Sector – Real Estate, which is a segment packed with options. Real estate investment trusts (REITs) are a popular income vehicle thanks to their taxation rules, and Sector – Real Estate mutual funds typically invest in them. A REIT is required to pay out at least 90% of its income annually to avoid double taxation, and this technique makes securities in these funds high dividend players-almost bond-like in some cases-though their risk is similar to equities.
History of Fund/Manager
Fidelity is responsible for FRIFX, and the company is based out of Boston, MA. The Fidelity Real Estate Income made its debut in February of 2003 and FRIFX has managed to accumulate roughly $1.26 billion in assets, as of the most recently available information. The fund’s current manager, Bill Maclay, has been in charge of the fund since March of 2019.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 3.99%, and it sits in the bottom 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 7.55%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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 8.61%, the standard deviation of FRIFX over the past three years is 6.72%. Over the past 5 years, the standard deviation of the fund is 8.39% compared to the category average of 9.87%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 0.45, the fund is likely to be less 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. With a negative alpha of -3.18, 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, FRIFX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.91%. From a cost perspective, FRIFX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Fidelity Real Estate Income ( FRIFX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Fidelity Real Estate Income ( FRIFX ) looks like a somewhat average choice for investors right now.
Want even more information about FRIFX? 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. And don’t forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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 (FRIFX): Fund Analysis Report
This article originally published on Zacks Investment Research (zacks.com).