Technology-focused investors looking for some exposure to semiconductors may want to consider the Fidelity Advisor Semiconductor (FELIX) mutual fund, which Zacks Investment Research gave a strong buy rating. In a report, the investment research firm said that the Fidelity Investments fund is attractive given its strong performance compared with its peers and its lower expenses compared with similar funds in the marketplace.
“The world of Sector – Tech funds is an area filled with options, and FELIX is one of them,” wrote Zacks in the research report. “This fund in particular has delivered a five-year annualized total return of 26.62%, 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 three-year annualized total return of 22.69%, which places it in the top third during this time frame.”
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Fidelity’s chip-focused mutual fund has been more volatile compared with its peers over recent years. According to Zacks, the standard deviation on FELIX over the past three years has been 17.04%, which compares with the category average of 10.35%. Over the past five years, the Advisor Semiconductor Fund had a standard deviation of 15.32%, which also is higher than the category average of 10.13%. The lower the standard deviation, the less volatile the fund is.
The Fidelity Advisor Semiconductor Fund, which launched in December of 2000, currently has $131.39 million in assets and is run by Stephen Barwikowski, who has been in charge of it since the start of 2009. The fund, which is focused on U.S.-based chip stocks, is 78.73% invested in stocks, with the companies having an average market capitalization of $85.97 billion. Zacks noted that the fund has a turnover rate of 99%, making it more active in terms of trades than the category average. The five top holdings in the fund are Intel Corporation (INTC), Broadcom Inc. (AVGO), QUALCOMM Incorporation (QCOM), NVIDIA Corporation (NVDA) and Micron Technology, Inc. (MU).
While Zacks noted that the Fidelity Advisor Semiconductor Fund underperformed comparable funds in the most recent bear market, the fund has a five-year beta of 1.1, which means that, in theory, it is more volatile than the market. “The fund has produced a positive alpha over the past five years of 11.27, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns,” Zacks noted. As for its expenses, the fund has an expense ratio of 0.87%, which is lower than the category average of 1.37%.