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Is Fidelity Select Insurance (FSPCX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

Any investors hoping to find a Sector - Finance fund could think about starting with Fidelity Select Insurance (FSPCX). FSPCX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FSPCX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FSPCX. Fidelity Select Insurance debuted in December of 1985. Since then, FSPCX has accumulated assets of about $257.31 million, according to the most recently available information. Peter Deutsch is the fund's current manager and has held that role since June of 2013.

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 9.96%, 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 11.6%, 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. FSPCX's standard deviation over the past three years is 12.48% compared to the category average of -0.01%. The standard deviation of the fund over the past 5 years is 12.69% compared to the category average of 1.57%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, FSPCX lost 63.21% and underperformed its peer group by 6321%. This might suggest that the fund is a worse choice than its peers during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.89, which means it is hypothetically less volatile than the market at large. 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. With a positive alpha of 0.44, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, FSPCX is a no load fund. It has an expense ratio of 0.81% compared to the category average of -62.34%. So, FSPCX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Select Insurance ( FSPCX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Fidelity Select Insurance ( FSPCX ) looks like a somewhat average choice for investors right now.

Don't stop here for your research on Sector - Finance funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FSPCX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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