Is Fidelity Stock Selector Small Cap (FDSCX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Small Cap Blend fund category, Fidelity Stock Selector Small Cap (FDSCX) could be a potential option. FDSCX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
FDSCX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.
Fidelity is based in Boston, MA, and is the manager of FDSCX. The Fidelity Stock Selector Small Cap made its debut in June of 1993 and FDSCX has managed to accumulate roughly $2.60 billion in assets, as of the most recently available information. A team of investment professionals is the fund’s current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FDSCX has a 5-year annualized total return of 14%, 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 13.98%, which places it in the top 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 13.19%, the standard deviation of FDSCX over the past three years is 18.58%. Looking at the past 5 years, the fund’s standard deviation is 20.41% compared to the category average of 14.4%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 1.12, so investors should note that it is hypothetically more volatile than the market at large. 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. FDSCX’s 5-year performance has produced a negative alpha of -3.9, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 largely on equities that are traded in the United States.
This fund is currently holding about 77.54% in stocks, and these companies have an average market capitalization of $6.12 billion. The fund has the heaviest exposure to the following market sectors:
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Finance
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Industrial Cyclical
This fund’s turnover is about 40%, so the fund managers are making fewer trades than its comparable peers.
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, FDSCX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 0.96%. FDSCX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Overall, Fidelity Stock Selector Small Cap ( FDSCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Fidelity Stock Selector Small Cap ( FDSCX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds 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).