Is Fidelity Select Materials (FSDPX) a Strong Mutual Fund Pick Right Now?
Any investors hoping to find a Sector – Energy fund might consider looking past Fidelity Select Materials (FSDPX). FSDPX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FSDPX as Sector – Energy, a segment packed with options. Sector – Energy mutual funds encompass a wide range of vastly changing and vitally important industries throughout this massive global sector. Oil and gas comprise the bulk of the exposure here, and carbon-based fuels are going to be the majority of assets in these funds. However, clean energy is starting to pick up steam.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FSDPX. The Fidelity Select Materials made its debut in September of 1986 and FSDPX has managed to accumulate roughly $485.47 million in assets, as of the most recently available information. The fund is currently managed by Ashley Fernandes who has been in charge of the fund since April of 2022.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FSDPX has a 5-year annualized total return of 6.95%, 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 7.91%, 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. FSDPX’s standard deviation over the past three years is 18.24% compared to the category average of 11.65%. Over the past 5 years, the standard deviation of the fund is 20.56% compared to the category average of 13.83%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 1.02, which means 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. The fund has produced a negative alpha over the past 5 years of -3.9, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FSDPX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 0.95%. From a cost perspective, FSDPX is actually cheaper than its peers.
This fund requires a minimum initial investment of $0, while 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 Select Materials ( FSDPX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Sector – Energy area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FSDPX too 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.
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This article originally published on Zacks Investment Research (zacks.com).