Even the most passive observer of all things financial know the name Fidelity. While the company's brokerage services are quite well known, it is their broad range of mutual fund deal, which company is most famous. Many of you may be familiar with the storied Fidelity Magellan Fund and its equally famous fund manager, Peter Lynch. Lynch was known largely for his idea that individual investors could do much of what he did ... find good companies to invest ... by paying attention to quality, everyday products purchased by consumers. Lynch managed Magellan from 1977 through 1990, during which time the fund achieved an annual return of 29%.
Within the range of famed Fidelity mutual funds like Magellan, were those who specialize in specific industries and economic sectors. Known as Fidelity Select Portfolios, these funds give investors who want to make a player in an industry or niche that they think will be a very lucrative way to do it outside of the relative context of broad-based funds. What I fund very useful on Fidelity's Select Portfolios is the guidance they provide in terms of investment-worthy industries, as well as measuring stick, they offer average investors who have trouble deciphering more complex pieces of data. There is no such thing as a Fidelity Select Portfolios index, but perhaps there should be.
Among the things that a review of the Select Portfolios shows us is that in this economy, each sector will get clobbered. Although it's hardly a surprise that Fidelity Select Home Finance Portfolio mutual fund (which invests primarily in companies providing mortgages and other loans for home financing) has fallen 60% over the last year, the Fidelity Utilities Fund itself down almost 34% over the same period. Is not intended utilities to be defensive (read: always good because the service is always needed)? Maybe not. Looking further, while we all respond with a yawn to the news that the Select Automotive Portfolio fund is down 63% over the last years, some might raise an eyebrow that another finding that represents an ostensibly "recession-proof" industry, Select Healthcare portfolio has fallen 37% over the past year. Self Select Consumer Staples Portfolio fund, which could equally well be called "Choose specific Anti-Recession Funds," has fallen 25% over the last year.
What does this tell us? Ultimately, this is not typical recession, this recession as a result of a massive de-leveraging in all parts of the economy has taken another historic defensive sectors down with it. The fact is that even the most solid companies are heavily dependent on credit to maintain current operations and fuel growth, and this credit contraction has affected everyone. What else? That you should not be too hard on yourself if you do not like your stock portfolio, at present, because there really is not much else to go with your stocks driven cash. Something else: I will not put long term money in something defensive, to be honest, look at the performance of these portfolios, select, why should you? You might as well put your cash in shares and funds that historically lead the market and are mainly culled at this time.
Although I am in no way suggesting that you should leave Peru sing the financial magazines and watch the various cable-business network with great care (if these are activities that you have already done to engage), sometimes you can get a insight by paying attention to the simpler benchmarks. Visit www.fidelity.com and look after their sector resources to see just what I mean.
Fidelity Mutual Funds
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