Is Fidelity Select Leisure (FDLSX) A Strong Mutual Fund Pick Right Now?
Zacks Investment Research | Mar 04, 2019 07:00AM ET
If you've been stuck searching for Sector - Other funds, consider Fidelity Select Leisure (FDLSX) as a possibility. FDLSX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FDLSX. Fidelity Select Leisure debuted in May of 1984. Since then, FDLSX has accumulated assets of about $439.81 million, according to the most recently available information. The fund is currently managed by Becky Painter who has been in charge of the fund since August of 2017.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 9.97%, and is 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 12.4%, 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. Compared to the category average of 13.78%, the standard deviation of FDLSX over the past three years is 12.8%. The fund's standard deviation over the past 5 years is 12.38% compared to the category average of 14.04%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. FDLSX lost 44.11% in the most recent bear market and outperformed its peer group by 4.3%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.88, 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. The fund has produced a positive alpha over the past 5 years of 0.48, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Holdings
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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 82.78% of its assets in stocks, which have an average market capitalization of $62.96 billion. The fund has the heaviest exposure to the following market sectors:
- Non-Durable
- Retail Trade
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With turnover at about 56%, this fund is making fewer trades than its comparable peers.
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, FDLSX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.15%. FDLSX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Select Leisure ( FDLSX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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