Is Fidelity Select Medical Equipment & Systems (FSMEX) a good mutual fund choice right now?

IIf you’ve been researching mutual fund equity ratio funds, a place to start might be Fidelity Select Medical Equipment & Systems (FSMEX). FSMEX carries a Zacks mutual fund rating of 1 (strong buy), which is based on nine predictor factors such as size, cost and past performance.

Fund/manager history

Fidelity is based in Boston, MA, and is the manager of FSMEX. Fidelity Select Medical Equipment & Systems debuted in April 1998, and since then FSMEX has accumulated approximately $7.45 billion in assets, according to the most recent date available. Edward Yoon is the current fund manager and has held the position since May 2007.

Performance

Investors are naturally looking for high performance funds. This particular fund has generated a 5-year annualized total return of 13.73% and ranks in the top third among its peers in the category. But if you’re looking for a shorter time frame, it’s also worth looking at its 3-year annualized total return of 12.46%, which puts it in the top third over that time frame.

When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, FSMEX’s standard deviation is 21.07%, compared to a category average of 19.34%. Looking back over the past 5 years, the fund’s standard deviation is 19.31% compared to the category average of 18.24%. 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 0.93, so it will likely be less volatile than the market as a whole. Alpha is an additional metric to consider, as it represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which in this case is the S&P 500. Over the 5 years, the fund has a positive alpha of 1.82. This means that the managers of this portfolio are adept at choosing securities that generate higher returns than those of the benchmark index.

Expenses

As competition intensifies in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low cost product will perform better, all other things being equal. Thus, it is essential for investors to take a closer look at the cost parameters. In terms of fees, FSMEX is a zero-cost fund. It has an expense ratio of 0.68% compared to the category average of 1.29%. FSMEX is actually cheaper than its peers when considering factors like cost.

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

Conclusion

Overall, Fidelity Select Medical Equipment & Systems (FSMEX) has a high ranking in the Zacks Mutual Fund, and in conjunction with its relatively strong performance, medium downside risk, and lower fees, this fund appears to be a good potential choice for investors right now.

Want even more information about FSMEX? Then head over to Zacks.com and check out our mutual fund comparison tool and all the other great features we have to help you with your mutual fund analysis for more information. If you’re more of an equity investor, be sure to also check out our Zacks Rankings and comprehensive suite of tools we make available to both novice and professional investors.

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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.

Dolores W. Simon