Sector - Real Estate fund seekers should not consider taking a look at Fidelity International Real Estate (FIREX) at this time. FIREX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify FIREX in the Sector - Real Estate category, an area full of possible choices. Sector - Real Estate mutual funds typically invest in various real estate investment trusts (REIT). A REIT is a popular income vehicle thanks to taxation rules that require REITs to payout at least 90% of their income each year in order to avoid double taxation. This technique makes securities here high dividend payers, and almost bond like in some cases; however, they still carry the risk of equities.
History of Fund/Manager
FIREX is a part of the Fidelity family of funds, a company based out of Boston, MA. Fidelity International Real Estate debuted in December of 2004. Since then, FIREX has accumulated assets of about $150.51 million, according to the most recently available information. Guillermo de las Casas is the fund's current manager and has held that role since April of 2010.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of -2.22%, and it sits in the bottom 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 -8.96%, 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. Compared to the category average of 15.14%, the standard deviation of FIREX over the past three years is 17.97%. The fund's standard deviation over the past 5 years is 17.79% compared to the category average of 16.05%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.8, so it is likely going to be 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. The fund has produced a negative alpha over the past 5 years of -13.33, which shows 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, FIREX is a no load fund. It has an expense ratio of 0.94% compared to the category average of 0.97%. Looking at the fund from a cost perspective, FIREX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Fidelity International Real Estate ( FIREX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Fidelity International Real Estate ( FIREX ) looks like a somewhat weak choice for investors right now.
Your research on the Sector - Real Estate 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 are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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