The Best Fidelity Funds Right Now May Surprise You

Volatility has increased in the equity markets in the last two weeks, which makes it confusing for investors to see where the market is headed. That is why it may be useful to take a look at the top 10 ranked Fidelity funds (ranking is provided by FidelitySignal):

FidelitySignal_Top 10

To make sense of the current market dynamics, let’s focus on the Fidelity funds with green arrows in the weekly column. These are the investments that both make the top 10 ranking and also have increased their rank compared to a week ago.

On top of the list is the Fidelity Select Natural Gas Fund (FSNGX). The top panel in the chart below shows that FSNGX has a very strong relative strength (ratio of the the fund and the $SPY tracking index) compared to the S&P 500 index:

fsngx

Our second example is the Fidelity Select Natural Resources Fund (FNARX). As noted in earlier blog articles, FNARX continues to outperform other equity sectors:

fnarx

The third example is the Fidelity Real Estate Income Fund (FRIFX). We highlighted FRIFX as a top income investment choice for 2014 in previous articles and FRIFX continues to show a strong positive trend:

frifx

Now, let’s contrast our top  movers with the currently weakest sector, which is biotechnology (see FBIOX chart below):

fbiox

 

In conclusion, while utilities and other defensive sectors are making gains, as well, the current market environment seems to favor natural resources and real estate investments.

 

Buy and sell signals are available at FidelitySignal.com

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Sector Rotation Intensifies as we Approach the Seasonally Weak April-May Period

“Sell in May and go away” is a well know Wall Street adage that warns investors to sell their equity holdings in May to avoid the seasonal decline of the equity markets. Will the adage prove to be true in 2014? After the outstanding returns of the last 18 months, is the U.S. stock market vulnerable to a serious correction?

We think that the risks for equities have increased and investors should be extremely cautious in this market. As we noted in previous blog articles, the sector rotation has started a week ago and a correction is under way in the previous market-leading sectors, such as biotechnology and gold. At the same time, defensive investments, including utilities and treasury bonds are in favor again. Geopolitical risks may be on the rise, as well, especially if the military conflict in the Ukraine escalates in the coming weeks.

Severe corrections are under way in the biotech and gold sectors:

fbiox

fsagx

At the same time, defensive sectors, such as utilities are gaining favor with investors:

fsutx

Source: FidelitySignal.com

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Best Fidelity Mutual Fund of 2013: Select Biotechnology Fund; Commodity Funds are also Gaining Momentum;

Fidelity Select Biotechnology Fund (FBIOX, last change: 2.05%)

The stock market rallied today in spite of the government shut down. The top Fidelity mutual fund, the Select Biotechnology Fund (FBIOX, last change: 2.05%) gained the most in today’s session. FBIOX has returned a stellar 62.86% so far in 2013 and shows no signs of slowing down. Also notable, that commodity-related mutual funds made it to the top 10 list today. These are the Fidelity Select Natural Gas (FSNGX) and the Fidelity Global Commodity Stock (FFGCX) funds.

Buy/sell signals for Fidelity funds are available at FidelitySignal.com

Top 10 Fidelity Sector Funds For The Summer Rally

Fed chairman Bernanke’s comment last week stating that the Fed’s policy will be highly accommodative for the foreseeable future led to an across-the-board rally for the U.S. stock market. The market looks decidedly bullish, with many sectors breaking out to new highs.

On the other hand, we are in the middle of the earnings season, which is often associated with increased volatility. Given the current market environment, what are the best investment choices for Fidelity investors?

To answer this question, first lets look at the data. The table below shows the ranked list of the top 10 Fidelity mutual funds based on three-month return, a measure of price momentum.

Top 10 Fidelity Mutual  Funds

Top 10 Fidelity Mutual Funds

Source: FidelitySignal.com

Surprisingly, all of the Fidelity funds on the top 10 list are sector funds. This is highly unusual. Even a few months ago, we would have seen international funds (e.g. Japanese funds) or other investment choices on this list. Even beaten down sector funds, such as the Fidelity Real Estate Investment Fund (FRESX), are now turning bullish. Consequently, the data tells us that smart money is on U.S. sector investments right now.

The second observation is that the list of top Fidelity funds is highly diversified. In addition, all of the ten funds have returned more than 10% in the last three months, in spite of the recent market correction.

The current leaders are the Fidelity Select Automotive (FSAVX), the Fidelity Select Biotechnology (FBIOX) and the Fidelity Select Banking (FSRBX) funds. In addition, it is important to note that four out of the ten funds are related to the finance sector.

Companies investing in the consumer sector are also bullish. The best fund to play this trend is the Fidelity Select Retailing (FSRPX) fund.

For investors who are looking for emerging trends in technology, the Fidelity Select Software and Computers (FSCSX), the Fidelity Select IT Services (FBSOX) and the Fidelity Select Electronics (FSELX) funds offer new opportunities.

Buy/sell signals for Fidelity funds are available at FidelitySignal.com