Is Fidelity Select Air Transportation (FSAIX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

Any investors hoping to find a Sector - Other fund might consider looking past Fidelity Select Air Transportation (FSAIX). FSAIX carries a Zacks Mutual Fund Rank of 4 (Sell), 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 FSAIX. The Fidelity Select Air Transportation made its debut in December of 1985 and FSAIX has managed to accumulate roughly $286.73 million in assets, as of the most recently available information. Matthew Moulis is the fund's current manager and has held that role since January of 2012.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 9.89%, 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 14.44%, 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 14.29%, the standard deviation of FSAIX over the past three years is 18.28%. The standard deviation of the fund over the past 5 years is 17.08% compared to the category average of 14.7%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. FSAIX lost 61.29% in the most recent bear market and underperformed comparable funds by 13%. This means that the fund could possibly be a worse choice than its peers during a down 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. FSAIX has a 5-year beta of 1.17, which means it is likely to be more volatile than the market average. 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. FSAIX's 5-year performance has produced a negative alpha of -1.01, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, FSAIX is a no load fund. It has an expense ratio of 0.81% compared to the category average of 1.17%. Looking at the fund from a cost perspective, FSAIX is actually cheaper than its peers.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Select Air Transportation ( FSAIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Select Air Transportation ( FSAIX ) looks like a somewhat weak choice for investors right now.

For additional information on the Sector - Other area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FSAIX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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