This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fidelity's Red-Hot Sector Funds

The SPDR technology ETF is dominated by a handful of giant stocks, including Apple (AAPL), International Business Machines ( IBM), and Microsoft (MSFT). Fidelity's portfolio manager Charlie Chai ranges more widely, buying small stocks and foreign issues as well as familiar blue chips.

Chai holds a mix that includes rapid growers as well as cyclical names that have fallen out of favor. A growth star in the fund has been Salesforce.com (CRM), which delivers software from the cloud that can be used by companies to provide customer service. Chai says that the company can continue growing for a sustained period. "They are taking market share away from established software competitors like Oracle (ORCL)," he says.

Chai aims to buy cyclicals when they are out of favor. A cyclical holding is Micron Technology (MU), which makes semiconductors that are used for data storage.

Some holdings are stable performers that can increase sales at annual rates of 10% or so. A stable holding is Visa (V). As a dominant player in the expanding credit-card business, the company can continue growing steadily.

Despite the strong returns of the Fidelity sector funds, many investors prefer ETFs because they offer some key advantages. While mutual funds like Fidelity's are only priced once a day at the market close, investors can trade ETFs constantly. Many ETFs can be tax efficient.

But the Fidelity funds could soon be offered as ETFs. Fidelity has filed with the SEC to begin providing actively managed ETFs. So far Fidelity has only filed to open a bond fund, but more active ETFs are likely to follow, says Pooneh Baghai, a consultant with McKinsey. She says that Fidelity is likely to roll out a host of active ETFs, including portfolios that are based on the sector funds. When that happens, Fidelity investors will be able benefit from the lower costs of ETFs and from Fidelity's experienced active sector managers.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
XLF $23.63 -0.46%
XLI $51.75 0.04%
XLK $40.60 0.20%
XLB $43.60 0.58%
AAPL $113.29 0.33%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs