NEW YORK (TheStreet) -- The SPDR passive sector funds rank among the most widely used ETFs. Popular choices include Financial Select Sector SPDR (XLF) - Get Financial Select Sector SPDR Fund Report, with $10.1 billion in assets, and Technology Select Sector SPDR (XLK) - Get Technology Select Sector SPDR Fund Report, with $8.9 billion. But investors might get better returns by considering the sector funds of SPDR's crosstown Boston competitor, Fidelity Investments. Many of the Fidelity funds -- which are actively managed -- have outpaced the index funds by wide margins.

During the past five years,

Fidelity Select Materials

(FSDPX) - Get Fidelity Select Materials Report

returned 9.0% annually, compared to 3.2% for

Materials Select Sector SPDR

(XLB) - Get Materials Select Sector SPDR Fund Report

.

Fidelity Select Industrials

(FCYIX) - Get Fidelity Select Industrials Port Report

returned 8.3%, compared to 4.9% for

Industrial Select Sector SPDR

(XLI) - Get Industrial Select Sector SPDR Fund Report

.

Other Fidelity funds that surpassed competing SPDR ETFs by more than 2 percentage points include

Fidelity Select Health Care

(FSPH)

,

Fidelity Select Technology

(FSPTX) - Get Fidelity Select Technology Report

, and

Fidelity Select Biotechnology

(FBIOX) - Get Fidelity Select Biotechnology Report

.

The Fidelity funds are not newcomers. Fidelity was a pioneer in the sector business, introducing its first industry funds in the early 1980s. Today the company has 41 sector funds. The group includes such narrow choices as

Fidelity Select Insurance

(FSPCX) - Get Fidelity Select Insurance Report

and

Fidelity Select Chemicals

(FSCHX) - Get Fidelity Select Chemicals Report

. Financial advisors have long used the sector funds to implement trading strategies. But in recent years, the Fidelity funds have been overshadowed by ETFs.

The ETFs have some clear advantages, including low expense ratios. The SPDR sector funds have expense ratios of around 0.18%, while the Fidelity funds charge about 0.81%. As actively managed portfolios, the Fidelity funds can sometimes miss the target.

Fidelity Select Energy

(FSENX) - Get Fidelity Select Energy Portfolio Report

and

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Fidelity Select Consumer Staples

(FDFAX) - Get Fidelity Select Consumer Staples Report

have trailed comparable SPDR funds.

But Fidelity's active managers have the freedom to overweight their top picks, an advantage that often results in strong results. A compelling choice is Fidelity Select Technology. During the past five years, the fund returned 9.3% annually, compared to 6.6% for Technology Select Sector SPDR.

The SPDR technology ETF is dominated by a handful of giant stocks, including

Apple

(AAPL) - Get Apple Inc. (AAPL) Report

,

International Business Machines

(IBM) - Get International Business Machines (IBM) Report

, and

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

. 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) - Get salesforce.com, inc. Report

, 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) - Get Oracle Corporation Report

," he says.

Chai aims to buy cyclicals when they are out of favor. A cyclical holding is

Micron Technology

(MU) - Get Micron Technology, Inc. (MU) Report

, 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) - Get Visa Inc. Class A Report

. 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.

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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.