The Fidelity Real Estate Income Fund (FRIFX) is one of the best mutual funds available for investors who want to participate in the U.S. real estate market. Unfortunately, the continued rise of interest rates has weakened the sector (see previous blog post) and FRIFX is not longer an attractive investment, at least until the real estate sector turns around.
Not surprising that the Fidelity Real Estate Portfolio Fund (FRESX) shows a weakening chart pattern. FRESX has moved below its 100 day moving average, which is another bearish sign. While it is possible for real estate stocks to bounce back to the top of the trading range, we would look for growth somewhere else in the coming weeks.
The yield on the benchmark 10 year treasury note have moved above 2.70%. With interest rates continuing to go up, it is not surprising to see investment funds for treasury bonds to continue the decline that was started in May 2013.
The Fidelity Real Estate Investment Fund (FRESX, last change: -1.94%) is the weakest performer in our survey of Fidelity mutual funds. FRESX lost 14.1% in the last three months. While a snap-back rally can occur at this oversold level, investors are best served by continuing to avoid this sector.
The spike of the money market rates last week in China caused a near panic selling of equities. The selling continued today and as the result, the Fidelity China Region Fund (FHKCX, last change: -3.21%) was the weakest performing Fidelity international fund. The intensity of the selling and the extent of the drop make us believe, that an oversold rally should happen soon. Our hope is that this will stabilize the Chinese equity market and build a new base for future growth.
The selling of gold mining stocks accelerated today. As the result, the Fidelity Select Gold Fund (FSAGX, last change: -4.92%) has reached a new 52-week low. The panic selling of gold stocks is not well explained by the news. This should serve as a red flag for investors who are trying to pick the bottom to go long in gold. We will not consider investing in this sector until prices stabilize.
The Fidelity High Income Fund (SPHIX, last change: -0.64%) has moved below its 100 day moving average, which signals an interruption of the steady gains that were achieved by this fund in the last 12 months.