Someone asks:
Does anybody ever do sector funds such as FSELX or FSPTX? Thoughts on these?
FSELX vs. FSPTX: What Are the Differences?
- FSELX is the Fidelity Select Semiconductors mutual fund that invests over 90% of its assets in Semiconductors and Semiconductors Equipment. The fund spends a slight amount (about 2% of portfolio weight) on the Application Software industry.
- FSPTX is the Fidelity Select Technology Portfolio. It primarily invests in Systems Software, Technology Hardware, and Application Hardware. FSPTX also invests in Semiconductors. However, that is only worth 13.65% of the fund’s portfolio.
- FSELX and FSPTX are not cheap. They have a similar expense ratio, 0.70% and 0.69%, respectively.
- The turnover rate of FSPTX is 76%. This is much higher than FSELX, which comes in at 36%. Turnover rate is defined by how often the fund manager buys and sells its holdings on a yearly basis.
FSELX vs. FSPTX: How Are They Similar?
- Both funds pay dividends semi-annually, every April and December.
- Morningstar placed FSELX and FSPTX in its “Large Growth Technology” category. This means both mutual funds invest in companies with market values greater than 10 billion and potential for substantial growth.
- They do not track a specific index.
FSELX Top 10 Holdings
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| NVIDIA Corp. | NVDA | 26.45% |
| NXP Semiconductors N.V. | NXPI | 7.56% |
| Marvell Technology Inc. | MRVL | 6.87% |
| Microchip Technology Inc. | MCHP | 5.28% |
| ON Semiconductor Corp. | ON | 4.39% |
| Analog Devices Inc. | ADI | 4.16% |
| Lam Research Corp. | LRCX | 3.79% |
| Teradyne Inc. | TER | 3.28% |
| Texas Instruments Inc. | TXN | 2.88% |
| Broadcom Inc. | AVGO | 2.82% |
As of 11/30/2021
FSPTX Top 10 Holdings
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| Microsoft Corp. | MSFT | 22.16% |
| Apple Inc. | AAPL | 18.77% |
| NVIDIA Corp. | NVDA | 6.36% |
| Salesforce Inc. | CRM | 3.22% |
| Adobe Inc. | ADBE | 2.59% |
| Mastercard Inc. | MA | 2.51% |
| Visa Inc. Cl A | V | 2.40% |
| SunRun Inc. | RUN | 2.24% |
| Jabil Inc. | JBL | 2.03% |
| ON Semiconductor Corp. | ON | 1.89% |
As of 11/30/2021
Compare Performance and Returns
Let’s look at how FSELX and FSPTX have been performing within the last 5 years.
| Funds | Fidelity® Select Semiconductors Portfolio | Fidelity® Select Technology Portfolio |
|---|---|---|
| 1 month | +1.70% | +0.88% |
| 3 months | +29.06% | +10.02% |
| 6 months | +29.13% | +9.82% |
| 1 year | +59.19% | +21.97% |
| 3 years | +55.64% | +44.49% |
| 5 years | +35.06% | +32.75% |
An investment of $10,000 in FSELX, since January 2012, now would be worth $121,338.
An investment of $10,000 in FSPTX, since January 2012, now would be worth $84,681.
Which is Better? FSELX or FSPTX?
There aren’t many similarities between FSELX and FSPTX. Although they focus primarily on the tech sector, one fund puts more weight on Semiconductors than the other.
As the chart above illustrates, FSELX has also significantly outperformed FSPTX in recent years.
If you want to hear more feedback before you start investing, check out the comments below.
Steve L:
FSPTX is the second-largest holding in my IRA. It has performed very well. Chips are the future, but you need to be prepared for volatility—definitely a case for DCA, not lump sum investment.
David J:
I do not own any sector funds because they are higher risk, less diversified, and more expensive than Index or Zero funds.
David D:
I’ve had FSELX for a couple of months in my brokerage account. It’s up over 30%. I plan to use the money in this account in the next ten years to not worry about Dave Ramsey’s style of investing.
Micheal M:
I like the idea of sector funds personally. I hold some FSELX, but that’s my only sector fund. I am looking to add maybe 2-3 more. I’m still deciding how far in I’ll go, though.
My current thought is doing sector funds in place of international, but I’m not 100% sure yet. If I go this route, I’ll probably keep these funds to about 25%. So essentially, I would divide up that 25% portion into my sector funds accordingly.
John D:
The issue with tech funds (or any sector fund, really) is that they are already very well represented in the total market index funds. For example, 27% of FSKAX is invested in tech stocks (by far the biggest sector of the fund). So when you go out and buy a specialized tech fund, you are basically saying you know more than the collective whole of investors do.
In addition, you’re increasing your uncompensated risk. As an investor, you have to have a very good reason for doing that. Otherwise, don’t do it.
Edu F:
I have FSPTX as part of my portfolio. FSMEX as well. Also, have TAN ETF for exposure to the green energy sector.
Luke K:
Yes! I got it at 17.91. It has been one of my biggest investments and my highest profit. I have a lot of my retirement in FSPTX. If I could go back in time, I would have changed a lot of my investments, but this one is one thing I wouldn’t change!
Gerry S:
Fidelity has great performing sector funds with higher fees than index funds but is still below average for an actively-managed fund. I have the software and IT portfolio, and it’s been on a tear, and I believe worth the higher fees.
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