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FSCPX

Fidelity Select Consumer Discretionary

Category:

Consumer Cyclical

Benchmark:

MSCI World DivAdj Idx (M-WD)

AUM:

511.122

TTM Yield:

0.03%

Expense Ratio:

0.74

Strategic Focus on Consumer Discretionary

Fidelity Select Consumer Discretionary (FSCPX) stands out with its strategic focus on the consumer discretionary sector, investing at least 80% of its assets in companies engaged in manufacturing and distributing consumer goods. This fund is designed for investors seeking capital appreciation through exposure to both domestic and international markets. Managed by Fidelity Investments, a leader in the financial services industry, FSCPX leverages its expertise to identify high-potential companies within the consumer sector. The fund’s top holdings, including Amazon and Tesla, reflect its commitment to investing in industry leaders poised for growth. This focus on consumer discretionary stocks positions FSCPX as a compelling option for investors looking to capitalize on consumer spending trends and economic growth.

At A Glance

Executive Summary

FSCPX focuses on consumer goods, offering growth potential with a 12.25% 10-year return. High beta indicates volatility; ideal for risk-tolerant investors.

– Strong 10-year annualized return of 12.25%. – High exposure to leading consumer companies like Amazon and Tesla. – Managed by Fidelity, a reputable investment firm. – Suitable for growth-focused investors seeking capital appreciation.

– High beta of 1.52 indicates significant volatility. – Low yield of 0.03% may not suit income-focused investors. – Concentrated in consumer cyclical sector, lacking diversification. – Expense ratio of 0.74% is higher than some peers.

Performance Highlights: Riding the Consumer Wave

FSCPX has demonstrated impressive performance across various time frames, particularly over the past year with a return of 35.16%, outpacing its benchmark, the MSCI World DivAdj Index, which returned 33.21%. Over the long term, the fund has achieved a 10-year annualized return of 12.25%, showcasing its ability to deliver consistent growth. This performance can be attributed to its strategic allocation in high-growth consumer companies like Amazon and Tesla, which have benefited from increased consumer spending and technological advancements. The fund’s ability to outperform during bullish market phases highlights its potential for capital appreciation, making it an attractive choice for growth-oriented investors.

Navigating Volatility: Understanding FSCPX’s Risk Profile

FSCPX’s risk profile is characterized by a high beta of 1.52, indicating that the fund is more volatile than the broader market. This heightened volatility is a double-edged sword, offering the potential for higher returns during market upswings but also posing greater risks during downturns. The fund’s Sharpe ratio of 0.11 suggests that its returns, while strong, come with significant risk. However, its alpha of 1.91% indicates that the fund has historically outperformed its expected returns based on its risk level. Investors should be aware of the fund’s downside risk, with a maximum drawdown of -12.6%, and consider their risk tolerance before investing. FSCPX is best suited for those who can withstand short-term volatility in pursuit of long-term gains.

Portfolio Composition: A Deep Dive into Holdings

FSCPX’s portfolio is heavily weighted towards the consumer cyclical sector, with 95.20% of its assets allocated to this category. This concentration reflects the fund’s strategic focus on consumer discretionary stocks, which are poised to benefit from economic growth and increased consumer spending. The fund’s top holdings include industry giants like Amazon, Tesla, and The Home Depot, which together account for a significant portion of the portfolio. This focus on large-cap, high-growth companies underscores the fund’s commitment to capital appreciation. Additionally, the fund’s allocation to non-U.S. equities at 4.10% provides some international exposure, allowing investors to benefit from global consumer trends. Overall, FSCPX’s portfolio composition is designed to capture the upside potential of leading consumer companies.

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Yield and Income Strategy: A Growth-Centric Approach

FSCPX offers a modest yield of 0.03%, reflecting its primary focus on capital appreciation rather than income generation. This low yield may not appeal to income-focused investors seeking regular dividends. However, for growth-oriented investors, the fund’s strategy of reinvesting earnings into high-potential consumer companies can lead to substantial capital gains over time. Compared to similar funds, FSCPX’s yield is lower, but its strong performance in terms of annualized returns compensates for this. Investors looking for growth rather than income will find FSCPX’s approach aligned with their objectives, as it prioritizes long-term capital appreciation over short-term income.

Expense Ratio: Balancing Costs and Returns

FSCPX has an expense ratio of 0.74%, which is relatively higher compared to some of its peers. While this may be a consideration for cost-conscious investors, it’s important to weigh the expense against the fund’s strong performance history. The fund’s ability to deliver a 10-year annualized return of 12.25% suggests that the higher expense ratio is justified by its potential for capital appreciation. When compared to category averages, FSCPX’s expense ratio is competitive, especially given its focus on high-growth consumer discretionary stocks. Investors should consider whether the fund’s performance potential outweighs the cost, particularly if they are seeking exposure to leading consumer companies.

Peer Comparison: Standing Out in the Consumer Sector

When compared to similar funds, FSCPX distinguishes itself through its strategic focus on consumer discretionary stocks and its strong performance record. While funds like Fidelity Select Tech Hardware (FDCPX) and Fidelity Adv Consumer Discretionary-I (FCNIX) offer competitive returns, FSCPX’s unique allocation to industry leaders like Amazon and Tesla sets it apart. Its higher beta indicates greater volatility, but also the potential for higher returns in bullish markets. The fund’s expense ratio is slightly higher than some peers, but its consistent performance justifies the cost. FSCPX fits well within the competitive landscape, offering a compelling option for investors seeking growth in the consumer sector.

Future Outlook

The fund’s future performance is likely to be influenced by consumer spending trends and economic cycles. In a growing economy, FSCPX could outperform due to its focus on consumer discretionary stocks. However, in economic downturns, its high beta may lead to increased volatility. Ideal for investors bullish on consumer growth.

Investor Suitability: Aligning with Growth and Risk Tolerance

FSCPX is ideally suited for investors with a growth-focused mindset and a higher risk tolerance. Its strategic focus on consumer discretionary stocks offers significant capital appreciation potential, making it an attractive choice for those looking to capitalize on consumer spending trends. The fund’s high beta and volatility mean it is best suited for investors who can withstand short-term market fluctuations in pursuit of long-term gains. Income-focused investors may find the low yield less appealing, but those prioritizing growth will appreciate FSCPX’s commitment to investing in high-potential consumer companies. Overall, FSCPX is a strong fit for long-term investors seeking exposure to the dynamic consumer sector.

Current Market Context: Navigating Economic Cycles

The current market context for FSCPX is shaped by economic cycles and consumer spending trends. As a fund heavily invested in consumer discretionary stocks, its performance is closely tied to the health of the economy. In periods of economic expansion, consumer spending typically increases, benefiting the fund’s holdings in companies like Amazon and Tesla. However, in economic downturns, consumer discretionary stocks may face headwinds, leading to increased volatility. Additionally, interest rate changes can impact consumer spending power, influencing the fund’s performance. Investors should consider these factors when evaluating FSCPX, particularly in light of potential tax implications and sector-specific conditions.

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