Is Fidelity Select Defense & Aerospace (FSDAX) a Strong Mutual Fund Pick Right Now?

Any investors hoping to find a Sector - Other fund could think about starting with Fidelity Select Defense & Aerospace (FSDAX). FSDAX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FSDAX. The Fidelity Select Defense & Aerospace made its debut in May of 1984 and FSDAX has managed to accumulate roughly $2.30 billion in assets, as of the most recently available information. The fund is currently managed by Clayton Pfannenstiel who has been in charge of the fund since December of 2021.

Performance

Of course, investors look for strong performance in funds. FSDAX has a 5-year annualized total return of 17.31% and it sits in the middle 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 23.43%, which places it in the top third during this time-frame.

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It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 21.35%, the standard deviation of FSDAX over the past three years is 19.71%. The fund's standard deviation over the past 5 years is 20.58% compared to the category average of 21.25%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.85, which means it is hypothetically 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. FSDAX's 5-year performance has produced a positive alpha of 4.09, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FSDAX is a no load fund. It has an expense ratio of 0.65% compared to the category average of 0.85%. FSDAX is actually cheaper than its peers when you consider factors like cost.

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

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Fidelity Select Defense & Aerospace ( FSDAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar 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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This article originally published on Zacks Investment Research (zacks.com).

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