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Is Fidelity International Small Cap (FISMX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

If you've been stuck searching for Non US - Equity funds, you might want to consider passing on by Fidelity International Small Cap (FISMX) as a possibility. FISMX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes FISMX as Non US - Equity, a segment stacked high with options. Non US - Equity mutual funds like to invest in companies outside of the United States, an important characteristic since global mutual funds are known to keep a good portion of their portfolio stateside. These kinds of funds can often extend across all cap levels, and will typically allocate their investments between emerging and developed markets.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FISMX. Since Fidelity International Small Cap made its debut in September of 2002, FISMX has garnered more than $1.22 billion in assets. The fund's current manager, Sam Chamovitz, has been in charge of the fund since March of 2014.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 6.74%, and it sits in the top 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 5.55%, which places it in the middle 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. The standard deviation of FISMX over the past three years is 10.97% compared to the category average of 10.16%. Looking at the past 5 years, the fund's standard deviation is 11.02% compared to the category average of 10.4%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, FISMX lost 58.45% and outperformed its peer group by 0%. This means that the fund could possibly be an on par choice than its peers during a down market environment.

Even still, the fund has a 5-year beta of 0.71, so investors should note that it is hypothetically less volatile than 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. With a negative alpha of -0.98, 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, FISMX is a no load fund. It has an expense ratio of 1.21% compared to the category average of 1.24%. FISMX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity International Small Cap ( FISMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity International Small Cap ( FISMX ) looks like a somewhat weak choice for investors right now.

Your research on the Non US - Equity 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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