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Is Fidelity Advisor Semiconductors A (FELAX) a Strong Mutual Fund Pick Right Now?

There are plenty of choices in the Sector - Tech category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Advisor Semiconductors A FELAX. FELAX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FELAX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FELAX. Fidelity Advisor Semiconductors A made its debut in December of 2000, and since then, FELAX has accumulated about $91.74 million in assets, per the most up-to-date date available. Stephen Barwikowski is the fund's current manager and has held that role since January of 2009.

Performance

Investors naturally seek funds with strong performance. FELAX has a 5-year annualized total return of 26.25% and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 22.31%, 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 10.35%, the standard deviation of FELAX over the past three years is 17.07%. The standard deviation of the fund over the past 5 years is 15.36% compared to the category average of 10.13%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, FELAX lost 57.28% and underperformed its peer group by 4.02%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 1.1, so investors should note that it is hypothetically more 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. FELAX's 5-year performance has produced a positive alpha of 10.9, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating 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 78.71% of its assets in stocks, which have an average market capitalization of $85.97 billion. With turnover at about 99%, this fund makes more trades in a given year than the average of 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, FELAX is a load fund. It has an expense ratio of 1.16% compared to the category average of 1.37%. So, FELAX is actually cheaper than its peers from a cost perspective.

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 Semiconductors A 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.

This could just be the start of your research on FELAX in the Sector - Tech category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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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