Best Fidelity Fund of 2014: Fidelity Real Estate Fund (FRESX)

Oversold stock markets rallied around the world today due to multiple factors, including declining interest rates and reduced geopolitical threats. I’d continue to be very cautious with committing new funds to equity investments until we can see if the rally can sustain itself. With that said, it is worth noting the emerging new trends in the healthcare, retail and the real estate sectors.

As an example, the chart shows that the Fidelity Real Estate Investment Portfolio Fund (FRESX) is turning increasingly bullish. The blue arrow on the chart shows the buy signal that was issued for FRESX by FidelitySignal.com on February 11. FRESX is now the top-performing Fidelity fund of the year based on total return.

fresx

View investment strategies and buy/sell signals at FidelitySignal.com

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The Best Fidelity Funds to Invest in after the Fed Meeting

The Federal Reserve said in a statement today that it will wind down its bond purchasing program in October, but will continue to aim at keeping interest rates low for a considerable time. Initially, equity markets reacted positively to the news, but the rally faded by the close of the market session.

From the technical standpoint, the most interesting development was the Dow Jones Industrial Average hitting a new all-time high at 17,156, while the other major indexes were not able to follow through. Small cap stocks, which typically lead the market in the early phases of a growth cycle, are the weakest right now.

As money rotates into large-cap blue chip stocks, the Fidelity Large Cap Growth Enhanced Index Fund (FLGEX) may be one of the best ways to put fresh money to work in the current market environment:

flgex

 

Unlike what we have seen during previous market rallies earlier this year, not all sectors show positive momentum right now. Consequently, as we head into the seasonally weak October period, investors will have to be increasingly more selective. The technology and health care sectors show the strongest relative strength right now and barely corrected during the recent sell off. Here are two Fidelity funds that investors can consider using to overweight positions in these two large sectors:

 

fselx

fsphx

While the Fed’s intention is to keep interest rates low, the yield on the long-term Treasury bond has started rising already and broke its long-term trend today:

tyx

 

As the result, the bond market sold off and most Fidelity bond funds retreated, as well. Should interest rates continue to climb, bond fund investors will be faced with a difficult situation: the Net Asset Value (price) of their funds can decrease, while they will still be liable for paying taxes on the dividends distributed by the funds. This situation may force more selling of bond funds, which can create a negative feedback cycle for the bond market. The trend reversal for the following two widely held Fidelity bond funds show the potential danger bond investors will face in a rising interest rate environment:

fbidx

flbix

 

 

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

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Why Diversify into International Markets

The prospect of worldwide economic recovery in 2015 is already making investors rethink their diversification strategy. Equity markets often anticipate economic changes 6 to 12 month into the future, as market participants are taking positions ahead of time.

One of the best ways for conservative investors to participate in the renewed interest in international markets is via the Fidelity Diversified International Fund (FDIVX).  FDIVX invests 58% of its assets in Europe, but Japan and Emerging Markets carry large weightings, as well. FDIVX also invests 12% of its assets in the United States.

From the technical analysis perspective, the two-year chart of FDIVX shows a strong bullish trend that was interrupted by a correction only last June. For most of 2014 the fund moved sideways until the recent breakout to a new high:

fdivx

 

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

 

Fidelity Convertible Securities Fund is a Solid Investment

The Fidelity Convertible Securities Fund (FCVSX) seeks a high level of total return by investing in convertible and preferred securities. The total return is achieved through a combination of income (the current yield is 2.16%) and capital appreciation.

The chart shows that FCVSX underperformed the broader market from February to mid May. Our expectation is that renewed interest in convertible securities will help FCVSX to resume its uptrend and that FCVSX will prove to be a solid investment in the coming months.

fcvsx

 

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

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Best Fidelity Mutual Funds for Investing in the Energy Sector

The gradually increasing price of natural resources and the prospect of worldwide economic recovery have resulted in the sector becoming one of the top investment areas. Fidelity offers several excellent mutual funds to take advantage of this long-term trend. Here, we highlight three of the top ranked natural resources funds (see ranking).

The Fidelity Select Natural Gas Portfolio Fund (FSNGX) is one of the top performing Fidelity mutual fund in 2014 with a 14.17% year-to-date return. The blue arrow on top panel of the chart shows that FSNGX has outperformed the S&P 500 index since January:

fsngx

The Fidelity Select Energy Services Fund (FSESX) also shows a similar, very bullish chart pattern:

fsesx

For investors who are interested in broad diversification across of natural resources, the Fidelity Select Natural Resources Fund (FNARX) offers an excellent investment choice:

fnarx

 

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

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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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Market Correction: Treasury Bond Fund is Trending Higher; Biotechnology Sector is at Oversold Levels and May See a Bounce Next Week

We noted in in the March 26 blog article that the sector rotation has intensified as we approach the seasonally weak April-May period. In the last two weeks the stock market sell off continued, which negatively impacted most equity mutual funds.

Long-term interest rates have also started to decline, which benefits the Fidelity Spartan Long-Term Treasury Bond Fund (FLBIX). The chart below shows the inverse correlation of FLBIX and interest rates (see $TYX, the 30-year Treasury Bond Yield Index on the top panel).

flbix

The biotechnology sector corrected the hardest in recent weeks. However, technical indicators show now that we have reached an oversold condition and a bounce is likely in the coming week:

fbiox

 

Source: FidelitySignal.com

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