Is Fidelity Select Technology (FSPTX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Sector - Tech fund? Fidelity Select Technology (FSPTX) is a potential starting point. FSPTX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FSPTX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.

History of Fund/Manager

FSPTX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Select Technology made its debut in July of 1981 and FSPTX has managed to accumulate roughly $8.29 billion in assets, as of the most recently available information. The fund is currently managed by Nidhi Gupta who has been in charge of the fund since July of 2018.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 22.9%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 24.94%, 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 21.74%, the standard deviation of FSPTX over the past three years is 20.93%. The standard deviation of the fund over the past 5 years is 19.26% compared to the category average of 19.51%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.13, so it is likely going to be 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. FSPTX has generated a positive alpha over the past five years of 10.44, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining 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 principally on equities that are traded in the United States.

The mutual fund currently has 97.79% of its holdings in stocks, and these companies have an average market capitalization of $584.98 billion. With turnover at about 32%, this fund is making fewer trades than the average comparable fund.

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, FSPTX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 1.38%. FSPTX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Select Technology ( FSPTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Your research on the Sector - Tech segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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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