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Health Sector Funds: FSPHX vs FSMEX and others

I have a small position in FSPHX and have had it for a while. I've been taking a closer look at FSMEX and I can't come up with a reason to keep FSPHX over FSMEX. Using premium... PRHSX and SHSAX along with a newcomer I've been watching ETIHX comes up. But it just seems FSMEX is far and away the consistent performer - looking at APR vs. Peer, Ulcer, Martin and DD. It has been outperforming my current FSPHX which had a tough 2020 in the vs. peer category. That said, it's beaten the S&P 500 consistently since it's inception. But so has FSMEX.

Just wondering if anyone has an opinion.
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Comments

  • I have owned FSEMX for a fair number of years and have no plans to liquidate. I know there is an ETF that invest in healthcare technology, but I am not familiar with it.

    Over the years, I have owned most of the funds you mentioned, but FSMEX stand out.

    I like the idea of investing in the technology of healthcare (for the most part). It appears to be a niche that has a very long run ahead.

    JMHO, Matt
  • I changed my opinion on risk vs return after the March 23 bottom when my health funds PRHSX and FSMEX dropped the same amount as the higher risk ARKG. Now, I compare returns and SD (3 year) and own only ARKG and PTH.
    ytd 1 YR return SD
    ARKG 19% 211% 38
    PTH 18 94 27
    FSMEX 9 37 18

    It works for me.

  • @Matt - the iShares ETF (IHI) is the closest match to FSMEX that I have found.
  • Thx Mark!

    I thought it was something like that. I know several others have recommended it in the past.
  • Using MFO search feature, here's FSMEX. I continue to own this fund as I prepare for hip replacement surgery. As @rono would say, "Own what you buy."

    https://mutualfundobserver.com/discuss/search?Page=p2&Search=fsmex

  • edited February 12
    @bee I read every one of those MFO posts via search. I saw a lot of folks support FSMEX... but I posted on the off chance someone had some info or reasoning why they would prefer FSPHX more. So far, the search is proving FSMEX or the ETF is the favored option from the people here. That’s what is great about this site. The history ‘ search is dense with good info. It also gives me a sense of people’s investing style/. Thanks for sharing. Have already learned a lot from your posts.

    One thing I’ve learned over the last couple of years... is to not be so sentimental with funds and keep them just because of past or even current performance when there are better ones out there outperforming and it’s “easier” (lazy) to just keep the one you have.
  • I have owned the Eventide offering for a couple years--good performance but concentrated in biotech so higher beta than others mentioned as well as expense ratio. Although not a prerequisite, I note that the portfolio manager is a physician which may enhance the on-board appreciation and understanding of therapeutic potential and market of holdings.

    Also hold IHI, which may benefit even further once elective procedures regain their pre-Covid status
  • Thanks @AZRph ... I’m really interested in those funds and have been very impressed with Finny credentials.
  • Does anyone know why the FSMEX MFO rating dropped to 3 over the 1 year term? I noticed that its APR vs Peer was only +2.2 but I'm just curious if there's another reason?

    I keep looking at PRHSX as well but am unsure of the manager changes that have occured since Kris Jenner left. Overall they have been pretty consistent, though. Some posters to the board here - have both funds which may be the way I should play it if I can't decide between the two. I would just rather simplify and have less funds these days.

    Inclined to sell my FSPHX for FSMEX but I didn't like the MFO rating drop to 3 for this Great Owl fund- FSMEX.
  • As a relatively long time holder of FSMEX, I don’t worry too much about the 1-year rating. It is up nearly 40% in the last twelve months!!!

    Maybe it has something to do with the category percentile ranking of 30???

    Profitable investing with whatever you decide!

    Matt
  • Howdy @JonGaltIII

    Since the 2010 census, about 10,000 baby boomers a day (retire, too) have crossed the age 65 threshold and by 2030, all boomers will be at least age 65. From 2019 data the boomers are about 72 million in population. Our house is boomers x 2. While there are now and will be failures of individual holdings within healthcare, I still fully consider this a growth area for equity. These folks will require more maintenance than the under 40 age group, yes? There will be the fails of hospitals, health insurance companies and the best laid plans for the next magic drug. There will likely also be continued mergers and acquisitions of big and small companies in many areas. This sector has had its recent funky periods (2015-2016), so it is not a slam dunk; but I still have faith in the broad sectors.
    From the devils advocate perspective, One would have to perform an overview of personal holdings to discover how much exposure your holdings have to healthcare now and how much you desire. The 3 below breakdowns give a hint to health sectors from various funds.
    Our own personal perspective is provide equity exposure that is meaningful to performance of the entire portfolio. We generally do not hold less than 10% of total portfolio in a given investment area. Performance may allow this number to become 25%; but this is an individuals judgement; based upon portfolio risk and faith in the sector.
    Our healthcare holdings travel the road between United Healthcare and genomics and whatever else is in the mix. The healthcare holdings over the years has more than paid for our supplemental insurance plans via United Healthcare. Invest in what you (and many others) use.
    Though FSMEX is currently open, the last hard close was a no-notify close at the end of a business; without a grace period.
    Lastly, if one were to have a full tour of various medical areas in a large hospital; you'd be able to view a large number of products from companies where you hold investments.
    My 2 cents worth.
    Take care,
    Catch

    AS OF 12/31/2020

    FSPHX Portfolio Weight

    Biotechnology 24.27%
    Health Care Equipment 20.25%
    Managed Health Care 18.10%
    Pharmaceuticals 18.03%
    Health Care Services 8.04%
    Life Sciences Tools & Services 6.93%
    Health Care Technology 1.51%
    Health Care Facilities 1.36%
    Application Software 0.65%
    Research & Consulting Services 0.29%
    Other Diversified Financial Services 0.08%
    Investment Banking & Brokerage 0.02%

    FSMEX Portfolio Weight

    Health Care Equipment 55.23%
    Life Sciences Tools & Services 23.09%
    Managed Health Care 5.75%
    Health Care Supplies 3.90%
    Health Care Technology 3.79%
    Health Care Services 3.46%
    Biotechnology 2.34%
    Application Software 0.86%
    Insurance Brokers 0.52%
    Apparel, Accessories & Luxury Goods 0.38%
    Research & Consulting Services 0.36%
    Textiles 0.22%
    Investment Banking & Brokerage 0.03%

    FSPGX Portfolio Weight (likely a typical growth index weighting)

    Information Technology 44.88%
    Consumer Discretionary 16.67%
    Health Care 13.49%
    Communication Services 10.99%
    Consumer Staples 4.53%
    Industrials 4.51%
    Financials 1.86%
    Real Estate 1.61%
    Materials 0.80%
    Multi Sector 0.54%
    Energy 0.08%
    Utilities 0.02%
  • @catch22 - what you said about boomers is exactly why I want extra exposure to this sector. So if I understand your post... if I believe more in health care equipment... go with FSMEX.
  • Yes Jon that is the takeaway. The Health Care fund is more dispersed and yet still holds a good slice of health care equipment while the Health Care Equipment fund is more targeted to that slice of the sector overall.
  • Jon, you noted about selling FSPHX to purchase FSMEX. I would personally consider this a viable choice. OR to start to build a position in FSMEX if you have cash or other holdings you have considered selling; as Fidelity has the $0 minimum in place for a purchase of FSMEX.
    I must add this note about our equity portfolio. Our entire portfolio is within tax deferred accounts: being traditional and Roth IRA's; and of course, we do not have to take into account any taxable sells. This status must also be a consideration when shuffling monies around, yes?
    You also mentioned a change in the MFO rating for FSMEX. I can not offer an opinion one way of the other about the implication of this change.
  • Thank you all. This is a very productive tread.
  • edited February 16
    As @catch has noted I see no reason one couldn't hold both except as a means for holding down the fund count. I wouldn't feel terrible about holding either fund however. They both have done quite well over time but with the edge going to FSMEX. No one knows which will do better in the future.
  • Thanks all. Really helpful info and I appreciate your contributions to the discussion. I think I may just swap for FSMEX but only because I'm trying to simplify/have less funds in this particular account. I think this sector will be strong for a while ... concurring with what you all have said. Think Baby Boomers.
  • Sven- I totally agree with that statement- great thread!!
  • Just noticed today that M* dropped FSPHX from 5 Stars to 4 Stars.
  • I have owned VHT for at least 10 years and never looked for an other. I think it covers health well.
  • @JonGaltIII
    Only my personal opinion. I do not rely upon star rating changes via M*. I watch for performance changes in a given investment and its related sector. Management or style changes with an investment could also have an impact, be it negative or positive. This gives me enough information to make decisions.
    As mutual fund buys and sells close at the end of a business day pricing, I forgot to add that if you choose to invest in FSMEX on a given start day, you may observe the etf IHI pricing through the trade day to give a very close reference of what pricing may be for FSMEX at the end of a business day.
  • Does anyone remember when you used to be able to trade the "Select" funds on an hourly basis at Fidelity? Good times.
  • Hi @Mark

    This is a reply to Derf from Jan. 18, which includes some info about Fido select trading. A bit of other not related chat, too.
    I don't recall the start date for phone trading of select funds, but did use this feature for a pencil performance chart I kept for each week ending pricing. I still have the darn papers.

    [email protected] You try'in to overload an oldtimers brain cells....???:)
    I recall reading a few articles in Barron's or WSJ about the Beardstown Ladies investment club.
    About the coworker investment club: the life span was a portion of 1985 through a portion of 1991. As most funds required $2,500 to invest (exception was FCNTX); we had to get to that point for a purchase of a fund. The goal was met in short fashion. The initial monies went into a MM Cash Reserves fund that had a 1988, 7 day yield of 7.2%.
    Additionally for the funds of this time period, is that many had a 3% (one time) front load and some had redemption fees up 1.5% within the first 12 months of purchase. This was still better than many of the prominent big houses at the time.....a Merrill Lynch, etc. The E.R. range was from .83 through 2%. The Select funds might also have a $75 trading fee. Select funds at the time could be bought and sold on the hour throughout the business day. Transactions were performed through F.A.S.T. (Fidelity Automated Service Telephone) using a touch-tone phone.
    All investments were through a Fidelity account and only used their mutual funds.
    I can offer a few trinkets about this period (1985-1991) and investing. As noted previous, Fidelity had already established numerous "select" funds; the front runners of sector funds or what are named thematic today.
    To the best of my recall, we used the following funds during this period:
    ---Cash Reserves, MM
    ---Select American Gold (later merged in Precious Metals)
    ---Select Computers
    ---Select Health Care
    ---Contra... FCNTX
    ---Captial & Income, (junk bonds and related) FAGIX
    We didn't trade often, mostly due to the fees. We also escaped, without harm, during the Oct., 1987 market melt, as we did not sell anything, and our position in American Gold provided a +40 in 1987 to provide a balance.
    My recall for the time frame of the club is 10-12% annualized. As members of the club placed different amounts each month, each member had a percentage of ownership when the club was dissolved; and the total profits were dispatched to each member, along with their tax form for the year.
    I'm sure I've missed something I thought about previously, but a fun flashback.
    Take care,
    Catch
  • Hi all... not trying to spam the thread - I think Telehealth will continue to grow and be extremely important to the Health Sector. My thinking has nothing to do with Covid - its what the Millennial/Gen Z expect: Convenience! So, I found this story on Mutual Funds with Telehealth. Note: Its from April 2020. Guess which fund is mentioned? (answer below)
    https://www.nasdaq.com/articles/3-funds-to-gain-from-rising-trends-in-telehealth-2020-04-14


    FSMEX
  • edited February 20
    I have also always thought of IHI as the comparable ETF for FSMEX. But I, tonight, found XHE. It’s the SPDR HC Equipmenr ETF. There appears to be significant overlap between the two (link). And doing a cursory check of recent performance, XHE has outperformed IHI over the last year or so. Has anyone looked at, or does anyone hold, XHE?

    Also, and many may know this, but the Fido Select Sector funds do not seem to have a redemption fee if held for under 60 days.

    I hold FSMEX as the single holding in my wife’s Fido only 403b (which she can no longer add to, and which is only about $5K). Good fund! Sold out of it in my own portfolio for FBIOX among others. Sorry I did that! I also bought a small piece of the Fido Healthcare Disruptor fund to see how it does.

    Also, EDOC is the ETF that focuses on telemedicine and related stocks, if anyone is interested.
  • I thought Fidelity levied short-term transaction fees on 2 or more round-trips within 90 days. Where did you see redemption fees waived for Fidelity funds? Thanks for your info !
  • edited February 20
    @carew388


    Fidelity Excessive Trading Policy
    , September, 2020

    SEE/READ FOLLOWUP in next post from me, regarding the Excessive Trading Policy. I write this at 4pm, Feb. 20.
  • edited February 20
    Just Fidelity Sector funds, I think. Not sure about round trips though...edit: looked up in the prospectus. They consider a round trip as a buy, then sell, within 30 days. After two round trips within 90 days, your trading is restricted. I was able to sell some sector funds within 30 days of buying in a couple of different accounts (I was surprised I didn’t get the “$49.95 fee” warning on the trade preview screen): in a brokerage link 403(b) account and in a Rollover IRA.
  • catch22 +1 TYVM for this info. I rarely make mutual fund trades of $10k. This will help me with many of my trades: buying and selling FBALX or FPURX instead of using AOK , for instance. It also means that if a new Fidelity purchase goes south, I can sell quickly to minimize losses. Thanks again!
  • @Graust and @carew388 et al

    As time allowed today, I reviewed the prospectus for FSMEX (a select fund), as well as FBALX and FPURX; more traditional mutual funds.
    The Excessive Trading Policy link I posted previous and dated Sept. 2020 and the language within is not described within the full prospectus for the 3 funds in this write.
    FSMEX prospectus is dated April, 2020 and both FBALX and FPURX are dated Oct. 2020.

    While at the Fido site (no login required) one should search for fund "x". Once open/displayed, select the prospectus TAB; which will pull up the summary prospectus. Select the "prospectus" tab from this new window. With this open, select " Additional Information about the Purchase and Sale of Shares" found along the left edge.

    There is a conflict of information about what constitutes a possible problem with round trip transactions and time frames; RELATIVE to the Sept. 2020 link I posted 2 sections back. A phone call will be needed to clarify what/which is true.

    Note: We're not frequently money movers, but our transactions would be more than $10k.

    Now.........how many call centers/at home staff are being overrun from having to re-route calls due to weather or volume problems?

    Anyhoo, I needed to clarify what I had posted previous; as I don't want anyone to be misdirected with information. The question/thought provided a needed exercise in due diligence; and to always read a prospectus, or sections thereof.
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