Is Fidelity Overseas Fund (FOSFX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Non US – Equity fund? Starting with Fidelity Overseas Fund (FOSFX) should not be a possibility at this time. FOSFX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Load Error

Objective

FOSFX is classified in the Non US – Equity area by Zacks, and this segment is full of potential. Non US – Equity funds focus their investments on companies outside of the United States, which is an important distinction since global mutual funds tend to keep a sizable portion of their portfolio based in the United States. Most of these funds will allocate across emerging and developed markets, and can often extend across cap levels too.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FOSFX. Since Fidelity Overseas Fund made its debut in December of 1984, FOSFX has garnered more than $6.86 billion in assets. Vincent Montemaggiore is the fund’s current manager and has held that role since January of 2012.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 8.8%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.96%, which places it in the bottom 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. FOSFX’s standard deviation over the past three years is 17.21% compared to the category average of 15.33%. Looking at the past 5 years, the fund’s standard deviation is 14.83% compared to the category average of 13.26%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.86, so it is likely going to be less 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. The fund has produced a negative alpha over the past 5 years of -2.85, which shows that 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, FOSFX is a no load fund. It has an expense ratio of 1.04% compared to the category average of 1.20%. Looking at the fund from a cost perspective, FOSFX is actually cheaper than its peers.

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 Overseas Fund ( FOSFX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Overseas Fund ( FOSFX ) looks like a somewhat weak choice for investors right now.

For additional information on the Non US – Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FOSFX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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