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Is Fidelity Select Chemicals (FSCHX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Sector - Other fund? Fidelity Select Chemicals (FSCHX) is a potential starting point. FSCHX holds a Zacks Mutual Fund Rank of 2 (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 FSCHX. Fidelity Select Chemicals made its debut in July of 1985, and since then, FSCHX has accumulated about $980.74 million in assets, per the most up-to-date date available. Richard Malnight is the fund's current manager and has held that role since October of 2016.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 4.16%, 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 5.76%, 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 FSCHX over the past three years is 18.61% compared to the category average of 14.29%. The fund's standard deviation over the past 5 years is 18.33% compared to the category average of 14.7%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, FSCHX lost 48.64% and outperformed comparable funds by 0%. This could mean that the fund is an on par choice than comparable funds during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.29, which means 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. FSCHX's 5-year performance has produced a negative alpha of -8.48, 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, FSCHX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.17%. From a cost perspective, FSCHX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

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

Your research on the Sector - Other 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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