Monday, September 26, 2022

Is Fidelity Select Biotechnology (FBIOX) a Strong Mutual Fund Pick Right Now?

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If you’ve been stuck searching for Sector – Health funds, consider Fidelity Select Biotechnology (FBIOX) as a possibility. FBIOX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Sector – Health funds is an area filled with options, such as FBIOX. Healthcare is one of the biggest sectors of the American economy, and Sector – Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

FBIOX is a part of the Fidelity family of funds, a company based out of Boston, MA. Since Fidelity Select Biotechnology made its debut in December of 1985, FBIOX has garnered more than $8.10 billion in assets. The fund’s current manager, Rajiv Kaul, has been in charge of the fund since October of 2005.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 16.48%, 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 14.43%, 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. The standard deviation of FBIOX over the past three years is 25.27% compared to the category average of 19.33%. The standard deviation of the fund over the past 5 years is 23.9% compared to the category average of 17.4%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.06, so investors should note that 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. FBIOX’s 5-year performance has produced a negative alpha of -0.35, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FBIOX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 1.32%. FBIOX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Select Biotechnology ( FBIOX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector – Health, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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