Is Fidelity Advisor Technology M (FATEX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Sector - Tech funds, you might want to consider passing on by Fidelity Advisor Technology M (FATEX) as a possibility. FATEX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FATEX 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 FATEX. Fidelity Advisor Technology M debuted in September of 1996. Since then, FATEX has accumulated assets of about $323.10 million, according to the most recently available information. Yun-Min Chai is the fund's current manager and has held that role since January of 2005.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 18.52%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 26.48%, 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 10.63%, the standard deviation of FATEX over the past three years is 16.27%. Over the past 5 years, the standard deviation of the fund is 15.99% compared to the category average of 10.99%. This makes the fund more 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. FATEX lost 59.95% in the most recent bear market and underperformed comparable funds by 6.62%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FATEX has a 5-year beta of 1.19, 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 relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 4.77, 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 mostly on equities that are traded in the United States.
This fund is currently holding about 91.72% stock in stocks, with an average market capitalization of $353.79 billion. With turnover at about 169%, this fund makes fewer trades than comparable funds.
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, FATEX is a load fund. It has an expense ratio of 1.29% compared to the category average of 1.31%. Looking at the fund from a cost perspective, FATEX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Advisor Technology M ( FATEX ) has a low Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Your research on the Sector - Tech segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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