Fidelity Investments, the third biggest fund family of the U.S. in terms of asset under management, was looking for more love from investors in August. According to Morningstar Inc., Fidelity, which, along with active funds also manages passive funds, witnessed $4.7 billion flow of money in passive funds in July, registering its best monthly increase in nine years.
Moreover, in July, Fidelity reduced expenses for 27 of its index funds. The cost of some of these funds was lower that of the market leader of passively managed funds, Vanguard. As investors are shifting more toward passive funds, Fidelity is improving its passive offerings.
Meanwhile, the fund family has witnessed a considerable increase in outflows against inflows in its active funds. Recently, in a Securities and Exchange Commission filing, Fidelity gave a petition to "modernize" the closed-end fund structure to generate the "Fidelity Exchange-Traded Active Fund."
On this matter, Fidelity spokeswoman Nicole Good said that they have suggested "some amendments to the closed-end fund structure." This structure is intended to eliminate or reduce issues faced by closed-end funds.
What Boosted Fidelity Fund's Performance?
Fidelity invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, most investment is made in the technology sector. In the cyclical sectors, the fund family invests the highest in financial services. The rising speculation of a rate hike in recent times had a positive impact on the broader financial industry, but weighed on the defensive sectors.
So, even if the fund family makes a big investment in one defensive sector, which is healthcare, it has failed to offer satisfactory returns. However, both technology and financial service sectors delivered attractive returns in the last one month.
Financial Services Select Sector SPDR (NYSEARCA:XLFS) jumped 5.5% in the last one-month period and was the biggest gainer among the S&P 500 sectors. Additionally, mutual funds related to this sector registered strong returns. According to Morningstar, the financial mutual fund posted a one-month positive return of 4.2%.
Additionally, the Technology Select Sector SPDR (NYSEARCA:XLK) increased 1.2% in the last one-month period and was one of the best performers among the S&P 500 sectors. Additionally, mutual funds related to this sector registered stable returns. According to Morningstar, the technology mutual fund posted a one-month positive return of 2.3%.
Buy These 4 Strong Fidelity Mutual Funds
Fidelity Investments is one of the largest and oldest mutual fund companies in the world. The company serves more than 25 million individual customers. As of Dec 31, 2015, Fidelity had total assets of $5.2 trillion with $2.0 trillion under management. Fidelity Investments carries out operations in the U.S. through 10 regional offices and over 180 Investor Centers. It also has a presence in eight other countries of North America, Europe, Asia and Australia.
The company provides investment advice, discount brokerage services, retirement services, wealth management services, securities execution and clearance and life insurance products to its clients. At Fidelity, a large group of investment professionals carry out extensive and in-depth research on potential investment avenues worldwide.
We have selected four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
These funds have encouraging one-month returns and the minimum initial investment is within $5,000. Also, these funds have low expense ratios.
Fidelity Advisor Electronics A (MUTF:FELAX) seeks growth of capital. FELAX invests a bulk of its assets in securities of companies engaged in manufacture, design and sale of electronic goods. This non-diversified fund invests in both domestic and foreign companies.
The fund has a one-month return of 5.7%, and an expense ratio of 1.27% as compared to the category average of 1.47%. As of the last filing, Intel Corp. (NASDAQ:INTC), Qualcomm Inc. (NASDAQ:QCOM) and Broadcom Ltd. (AVAGO) were the top three holdings for FELAX.
Fidelity Select Technology (MUTF:FSPTX) invests the lion's share of its assets in common stocks of companies that are engaged in developing and providing technological products and services. FSPTX seeks capital growth. The fund invests not only in U.S. companies but also in non-U.S. companies.
The fund has a one-month return of 3.2%. It has an expense ratio of 0.76% as compared to the category average of 1.47%. The fund is allocated to three major groups: Large Growth, Small Growth and Emerging Market.
Fidelity Select Consumer Finance Portfolio (MUTF:FSVLX) seeks appreciation of capital. FSVLX invests more than 80% of its assets in equity securities of companies involved in offering services related to consumer finance. The fund considers financial strength and economic conditions before investing in a company.
FSVLX has one-month return of 2.9%, and an expense ratio of 0.89% as compared to the category average of 1.46%. As of the last filing, Apple Inc. (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN) and Tesla Motors (NASDAQ:TSLA) were the top holdings for FSVLX.
Fidelity OTC Portfolio (MUTF:FOCKX) invests a major part of its assets in equity securities of companies, which are mainly traded on Nasdaq or the OTC market. As compared to the other markets, this OTC market includes more mid- and small-cap companies.
FOCKX seeks appreciation of capital. The fund also invests more than one-fourth of its assets in technology stocks. The fund not only invests in value and growth companies individually, but also in a combination of value and growth companies.
The fund has a one-month return of 0.9%. It has an expense ratio of 0.71% as compared to the category average of 1.17%. The fund is allocated in three major groups: Large Growth, Foreign Bond and Small Growth.