Is Fidelity Advisor Technology A (FADTX) A Strong Mutual Fund Pick Right Now?

If you've been stuck searching for Sector - Tech funds, consider Fidelity Advisor Technology A (FADTX) as a possibility. FADTX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FADTX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FADTX. Fidelity Advisor Technology A made its debut in September of 1996, and since then, FADTX has accumulated about $779.19 million in assets, per the most up-to-date date available. The fund's current manager, Yun-Min Chai, has been in charge of the fund since January of 2005.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 22.61%, 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 25.57%, 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. FADTX's standard deviation over the past three years is 15.63% compared to the category average of 10.4%. The fund's standard deviation over the past 5 years is 13.82% compared to the category average of 9.96%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In FADTX's case, the fund lost 59.78% in the most recent bear market and underperformed comparable funds by 6.85%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.09, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. With a positive alpha of 4.92, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

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Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.

As of the last filing date, the mutual fund has 81.27% of its assets in stocks, which have an average market capitalization of $307.96 billion. Turnover is 73%, which means, on average, the fund makes fewer trades than its comparable peers.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FADTX is a load fund. It has an expense ratio of 1.07% compared to the category average of 1.07%. FADTX is actually on par with its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Advisor Technology A has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and on par fees, Fidelity Advisor Technology A looks like a good potential choice for investors right now.

This could just be the start of your research on FADTX in the Sector - Tech category. Consider going to Zacks Investment Research

Written By: Zacks Investment Research