Mutual fund investors seeking impressive returns could consider the financial sector. Mutual funds are a great way to invest in a diversified pool of assets, which offer an option to secure investments against inflation, market risks and high transaction costs.
Investing in the financial sector comes with its share of benefits. First, investors can expect transparency because companies in the financial sector are extremely regulated and closely monitored. This careful monitoring offers investors the potential for solid returns over time.
Thus, investing in financial mutual funds seems prudent as of now. However, choosing the right mutual funds for your portfolio can become cumbersome. To that end, let us find out which of the two funds discussed below is better.
Fidelity Select Financial Services Portfolio FIDSX
This fund aims for capital growth. FIDSX primarily invests its assets in securities of companies principally engaged in financial services sector activities. The fund mostly invests in common stocks of both U.S. and non-U.S. companies.
FIDSX was incepted in December 1981 and is managed by Fidelity. The fund carries a Zacks Mutual Fund Rank #1 (Strong Buy) and has an annual expense ratio of 0.76%, which is below the category average of 1.41%. It has no minimum initial investment.
This Zacks Sector-Finance product has a history of positive total returns for over a decade. Specifically, the fund has returned 6.4% over the past five years. To see how this fund performed compared with its category, and other #1 and #2 (Buy) Ranked Mutual Funds, please click here.
The Fidelity Select Financial Services Portfolio, as of the last filing, allocates its assets in the top two major groups; Large Value and Small Value. Further, as of the last filing, Citigroup Inc (NYSE:C) and Bank of America Corporation (NYSE:BAC) are the top holdings in FIDSX.
Fidelity Select Banking Portfolio FSRBX
This fund seeks appreciation of capital. FSRBX normally invests at least 80% of its assets in common stocks of companies principally involved in banking. The fund invests in both U.S. and non-U.S. companies.
FSRBX was incepted in June 1986 and is managed by Fidelity. The fund carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.77%, which is below the category average of 1.42%. It has no minimum initial investment.
This Zacks Sector-Finance product has a history of positive total returns for over 10 years. Specifically, the fund has returned 6.1% over the past five years. To see how this fund performed compared with its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Banking Portfolio fund, as of the last filing, allocates its assets in the top two major groups; Large Value and Small Value. Further, as of the last filing, Bank of America Corp and Wells Fargo & Company (NYSE:WFC) were the top holdings in FSRBX.
To Conclude
Although both FIDSX and FSRBX are buy-rated funds, the former emerges a clear winner. Why? First, the fund’s returns over a three- and five- year period are higher than FSRBX’s. Second, FIDSX carries a lower three-year beta of 1.10 against FSRBX’s 1.41. So, investors looking for low risk and higher returns should bet on FIDSX.
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Zacks Investment Research