Is Fidelity Telecom/Utilities Fund (FIUIX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Sector – Utilities fund? Fidelity Telecom/Utilities Fund (FIUIX) is a possible starting point. FIUIX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify FIUIX in the Sector – Utilities category, an area that is rife with possible choices. Sector – Utilities funds focus their investments on firms that provide essential daily services to millions of people like electric power, gas distribution, and water supply. All in all, the utility industry is a perfect fit for those investors looking for stability and low volatility.

History of Fund/Manager

Fidelity is responsible for FIUIX, and the company is based out of Boston, MA. The Fidelity Telecom/Utilities Fund made its debut in November of 1987 and FIUIX has managed to accumulate roughly $945.16 million in assets, as of the most recently available information. The fund is currently managed by Douglas Simmons who has been in charge of the fund since September of 2005.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 8.84%, and is 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 5.5%, 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 13.91%, the standard deviation of FIUIX over the past three years is 13.13%. Looking at the past 5 years, the fund’s standard deviation is 12.05% compared to the category average of 12.9%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. FIUIX has a 5-year beta of 0.55, which means it is likely to be less volatile than the market average. 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. FIUIX has generated a positive alpha over the past five years of 0.73, demonstrating that managers in this portfolio are skilled in picking 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, FIUIX is a no load fund. It has an expense ratio of 0.74% compared to the category average of 1.25%. Looking at the fund from a cost perspective, FIUIX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Telecom/Utilities Fund ( FIUIX ) has a neutral 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 somewhat average 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. 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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