There are plenty of choices in the Sector – Other category, but where should you start your research? Well, one fund that you should consider investigating is Fidelity Select Consumer Staples (FDFAX). FDFAX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
FDFAX finds itself in the Fidelity family, based out of Boston, MA. Fidelity Select Consumer Staples debuted in July of 1985. Since then, FDFAX has accumulated assets of about $794.15 million, according to the most recently available information. Ben Shuleva is the fund’s current manager and has held that role since January of 2020.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 4.86%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.09%, 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. Over the past three years, FDFAX’s standard deviation comes in at 12.14%, compared to the category average of 11.29%. Over the past 5 years, the standard deviation of the fund is 14.04% compared to the category average of 13.02%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. FDFAX has a 5-year beta of 0.49, which means it is likely to be less volatile than the market average. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. FDFAX has generated a negative alpha over the past five years of -2.94, demonstrating that 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, FDFAX is a no load fund. It has an expense ratio of 0.68% compared to the category average of 0.91%. Looking at the fund from a cost perspective, FDFAX is actually cheaper than its peers.