Any investors hoping to find a Sector - Utilities fund could think about starting with Fidelity Telecom/Utilities Fund (FIUIX). FIUIX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FIUIX in Sector - Utilities, which is a segment packed with options. Known for its stability, the utility industry is perfect for investors seeking low risk. Sector - Utilities mutual funds focus on companies that provide essential services to millions of people on a daily basis: think electric power, gas distribution, and water supply.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FIUIX. Since Fidelity Telecom/Utilities Fund made its debut in November of 1987, FIUIX has garnered more than $1.08 billion in assets. Douglas Simmons is the fund's current manager and has held that role since September of 2005.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 8.08%, 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 10.94%, 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. Over the past three years, FIUIX's standard deviation comes in at 8.74%, compared to the category average of 9.27%. Looking at the past 5 years, the fund's standard deviation is 9.64% compared to the category average of 10.6%. This makes the fund less 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. In the most recent bear market, FIUIX lost 44.57% and outperformed its peer group by 0%. This makes the fund a possibly on par choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 0.47, so it is likely going to be less volatile than the market at large. 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. FIUIX has generated a positive alpha over the past five years of 2.93, demonstrating that managers in this portfolio are skilled in picking 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, FIUIX is a no load fund. It has an expense ratio of 0.68% compared to the category average of 1.26%. FIUIX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Telecom/Utilities Fund ( FIUIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Telecom/Utilities Fund ( FIUIX ) looks like a good potential choice for investors right now.
Your research on the Sector - Utilities 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Zacks Investment Research