On the lookout for a Sector - Health fund? Starting with Fidelity Select Biotechnology (FBIOX) is one possibility. FBIOX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We note that FBIOX is a Sector - Health fund, and this area is also loaded with various options. Sector - Health mutual funds give investors an opportunity to focus on one of the largest sectors of the American economy, healthcare. Funds in this category can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.
History of Fund/Manager
FBIOX finds itself in the Fidelity family, based out of Boston, MA. Fidelity Select Biotechnology made its debut in December of 1985, and since then, FBIOX has accumulated about $4.25 billion in assets, per the most up-to-date date available. The fund's current manager, Rajiv Kaul, has been in charge of the fund since October of 2005.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 3.8%, 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 -0.22%, which places it in the middle 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. FBIOX's standard deviation over the past three years is 22.11% compared to the category average of 17.18%. Over the past 5 years, the standard deviation of the fund is 22.15% compared to the category average of 17.75%. 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 0.71, 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. FBIOX has generated a negative alpha over the past five years of -5.3, demonstrating that managers in this portfolio find it difficult to pick 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, FBIOX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 1.11%. FBIOX 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.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, average downside risk, and lower fees, Fidelity Select Biotechnology ( FBIOX ) has a high Zacks Mutual Fund rank, and therefore looks a great potential choice for investors right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
