The 3 Best Sector Bets You Can Make With Fidelity Funds

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If you’re looking for the best sector funds to buy, a great place to begin your search is with Fidelity funds. In fact, your search for top sector bets may not need to extend beyond Fidelity.

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Fidelity offers 40 sector funds, called Fidelity Select Portfolios, each carving out their own niche in several industrial sectors including health, financials, utilities, consumer cyclical and energy.

Probably the most difficult part of finding the best sector funds at Fidelity is narrowing down the choices. At least 20 of Fidelity’s sector funds are highly rated with outstanding historical returns.

This history of performance is partly due to the deep analyst teams at Fidelity Investments that have helped make stars out of long-time Fidelity managers like Bill Danoff for Fidelity Contrafund (MUTF: FCNTX ) and Steve Wymer for Fidelity Growth Company (MUTF: FDGRX ).

To arrive at the cream of the crop among Fidelity’s sector funds, we selected only the highest-rated funds that have long track records and market-beating performance, with potential to outperform in the long run looking forward.

With that as a backdrop, here are the three best sector bets you can buy with Fidelity funds.

Best Sector Bets You Can Make With Fidelity Funds: Fidelity Select Chemicals (FSCHX)

Expenses: 0.8%, or $ 80 annually for every $ 10,000 invested
Minimum Initial Investment: $ 2,500

If you’re looking for an outstanding natural resources fund, Fidelity Select Chemicals Portfolio (MUTF: FSCHX ) is one of the best you can buy.

The FSCHX portfolio holds primarily stocks of companies like E I Du Pont De NemoursAnd Co (NYSE: DD ), Monsanto Company  (NYSE: MON ) and Dow Chemical Co (NYSE: DOW ), and similar companies that are engaged in or related to the chemical process industries.

The historic performance through the end of 2016 is strong with a 10-year annualized return of 12% and an incredible lifetime return, since the July 29, 1985 inception, of 13.7%. Short-term performance also looks good with a gain of 7.6% through the end of January 2017.

Although past performance is no guarantee of future results, the chemical process industries can sustain market-leading performance as long as the need for physical goods exists, which is likely to be quite some time.

Best Sector Bets You Can Make With Fidelity Funds: Fidelity Select Medical Equipment and Systems (FSMEX)

Expenses: 0.76%
Minimum Initial Investment: $ 2,500

Getting the best performance out of healthcare stocks comes primarily as a result of picking the best sub-sectors within the sector and Fidelity Select Medical Equipment and Systems (MUTF: FSMEX ) has done just that.

The FSMEX portfolio holds stocks of companies primarily in the health sector, specifically those that specialize in medical devices, supplies and related technologies. Top holdings include Medtronic plc. Ordinary Shares  (NYSE: MDT ), Boston Scientific Corporation (NYSE: BSX ) and Intuitive Surgical, Inc. (NASDAQ: ISRG ).

The health sector as a whole has performed well for years, but certain sub-sectors have had mixed results. For example, biotechnology stocks took a big hit in 2016 and many funds in the category fell in price by 20% or more.

However, FSMEX has had a more consistent performance story. Through January 26, 2017, the fund was up 6.4%, which compares to 2.8% for the average health sector fund. Long-term returns are also top notch. The lifetime return for FSMEX is 13.4%, which is since April 1998.

Best Sector Bets You Can Make With Fidelity Funds: Fidelity Select Retailing (FSRPX)

Expenses: 0.81%
Minimum Initial Investment: $ 2,500

Another of Fidelity’s top-rated funds, Fidelity Select Retailing (MUTF: FSRPX ), is one of the best consumer cyclicals sector funds on the market.

FSRPX holds stocks of companies, such as  Amazon.com, Inc. (NASDAQ: AMZN ), Home Depot Inc  (NYSE: HD ), and Priceline Group Inc (NASDAQ: PCLN ), that are engaged in the business of providing goods and services to consumers.

Investors looking to add retail stock exposure to their portfolio will like the performance history, which places FSRPX ahead of 99% of all consumer cyclical stock funds for 3-, 5-, 10- and 15-year annualized returns.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.

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