Four Favorite Fidelity Funds

02/24/2016 9:00 am EST

Focus: FUNDS

Jack Bowers

Editor, Fidelity Monitor & Insight

Jack Bowers is a leading mutual fund expert and an authority on the Fidelity family of funds. In his Fidelity Insight & Monitor, the advisor reviews some current favorite sector funds.

Fidelity Select Consumer Discretionary (FSCPX)

This fund includes retail, leisure, media, and auto companies. Manager Peter Dixon has placed more emphasis on technology-driven firms since taking over in mid-2014.

And where traditional consumer companies are still held he has favored those with robust business models that aren’t prone to being disrupted by innovation.

This group is one of our favorites for 2016 because lower energy costs along with an improving job market are giving consumers more discretionary income.

Fidelity Select Industrials (FCYIX)

The fund maintains a small position in transportation stocks and low commodity prices may weigh on this group.

But on the plus side, low energy costs are boosting demand for natural gas power generation and increasing domestic construction activity.

Quality and supply chain issues have in some cases prompted manufacturers to move production back to the US.

And the rising cost of unskilled labor is spurring automation activity on multiple fronts. This fund is a solid long-term bet.

Fidelity Select Insurance (FSPCX)

The emphasis here is property, casualty, life, and multi-line insurance. These stocks have largely sidestepped the regulatory punishment cycle that has consumed the banks and brokerages.

Low interest rates remain a risk, but this group benefits indirectly from consumer spending on homes and autos, while largely avoiding foreign markets.

Fears of a new era of extensive weather-related losses have largely subsided. And unlike other financial sectors, this group shouldn’t suffer much from bad loans or trading losses on commodity-related activity. As such, it’s still our favorite of the financial group.

Fidelity Select Technology (FSPTX)

This fund can invest in communications equipment, hardware, IT services, software, semiconductors, and just about anything else that’s technology-driven.

At a time when a growing share of this industry’s earnings are concentrated among a handful of technology giants, this fund has the flexibility to invest wherever innovation generates the greatest rewards.

Manager Charlie Chai has focused less on companies that make technology products, choosing instead to bet on firms that use technology to provide a valuable service or disrupt established markets.

This fund is a solid long-term bet, especially in today’s low inflation environment.

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