Is Fidelity Select Technology (FSPTX) a solid choice for mutual funds right now?

IIf investors are looking to the Mutual Fund Equity Report fund category, Fidelity Select Technology (FSPTX) could be a potential option. FSPTX 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

FSPTX is part of the Fidelity family, based in Boston, MA. Since Fidelity Select Technology debuted in July 1981, FSPTX has accumulated over $13.31 billion in assets. The fund is currently managed by Brian Lempel who has been in charge of the fund since July 2020.

Performance

Investors are naturally looking for high performance funds. This particular fund has generated a 5-year annualized total return of 32.74%, and it ranks in the top third among its peers in the category. But if you’re looking for a shorter timeframe, it’s also worth looking at its 3-year annualized total return of 44.47%, which puts it in the top third over that timeframe.

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, the standard deviation of FSPTX is 20.05%, compared to a category average of 22.06%. The standard deviation of the fund over the last 5 years is 19.28% against a category average of 20.26%. This makes the fund less volatile than its peers over the past half-decade.

Risk factors

Investors should keep in mind beta, an important way to measure a mutual fund‘s risk relative to the market as a whole. FSPTX has a 5-year beta of 1.09, which means it is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis against a benchmark – in this case, the S&P 500. FSPTX’s 5-year performance produced a positive alpha of 11.32, which means that the managers of this portfolio are adept at choosing stocks 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, FSPTX is a zero-fee fund. It has an expense ratio of 0.66% compared to the category average of 1.29%. Cost-wise, FSPTX is actually cheaper than its peers.

Although the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Conclusion

Overall, Fidelity Select Technology (FSPTX) has a high ranking in the Zacks Mutual Fund and, in conjunction with its relatively strong performance, medium downside risk and low fees, Fidelity Select Technology (FSPTX) appears to be a good potential choice for investors right now.

For more information on this product or to compare it to other mutual funds in the Mutual Fund Stock Report, go to www.zacks.com/funds/mutual-funds for more information. 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