Fidelity Select Fundranker

Frequently Asked Questions

Why only Fidelity Investments? (updated 5/4/2014)

Fidelity Investments is the largest mutual fund family, both in number of mutual funds and in total assets. They have an excellent staff of fund managers, stock analysts, specialists, and researchers, and a powerful, state-of-the-art website, which makes it very easy to manage your investments. All Fidelity Investments mutual funds are no-load, which means that all of the money you invest goes to work for you—none of it goes to pay upfront loads.


Why only Select mutual funds? (updated 5/8/2014)

Fidelity Select Fundranker research using data from 1997 to 2003 showed that using only the Select mutual funds resulted in a better overall return than using all of Fidelity Investments’ mutual funds.


How do I subscribe? (updated 5/4/2014)

Click the Subscribe button on our Home page to take advantage of our special PayPal rate of $49/first year, then $99/year for your subscription. If you prefer not to set up a recurring subscription through PayPal, you can send a check for $99 for a single-year subscription to Fidelity Select Fundranker, 39 Southchase Dr, Fletcher, NC 28732-9265. Include your email address. As soon as PayPal notifies us of your subscription, or we receive your check in the mail, we will email a welcome message to you with a complimentary copy of the current issue for your perusal. If you don’t receive this welcome email within a day or two of your PayPal transaction or within a week or so of mailing your check, please check your spam folder or contact us.


What do I get by subscribing? (updated 5/31/2014)

You will receive new issues of the Fidelity Select Fundranker newsletter via email on the first day of each month. You also will receive an Alert email a few days in advance of each issue. Subscribing to the newsletter is the only way to get timely notice of the the new Top Eight Model Portfolio and Fundranker exchanges each month. Newsletter issues are posted on our website after a one-month delay for historical access.


What are Fidelity minimums for opening accounts? (updated 2/4/2016)

Fidelity Investments’ minimum initial investment for a Select fund is $2,500. Note that if a fund balance falls below $2,500, it cannot be exchanged into a new fund, because it wouldn’t meet the minimum initial investment requirement. If Fundranker were to start a new, real life portfolio based on the Top Eight Model Portfolio, we would start with at least $3,000 in each of the eight funds to minimize the possibility of any one fund falling below $2,500. If we were constrained to less than $24,000 total to invest, rather than starting with less than $3,000 in each fund, we would start our real life portfolio with fewer than eight funds and add more funds when able. For Fidelity Simplified Employee Pension-IRA, Keogh, Self-Employed 401(k), and Non-Fidelity Prototype Retirement accounts, the minimum initial investment for a Select fund is $500, and we would start with at least $600 in each fund.


On what date is an exchange processed? (updated 5/4/2014)

Exchanges entered after markets close (usually 4pm ET) on a business day are not processed until the next business day. In other words, for an exchange to be processed on a particular business day, it can be entered anytime after markets close (usually 4pm ET) on the previous business day through the time markets close (usually 4pm ET) on the desired business day.


What are roundtrip transactions and how does Fundranker avoid them? (updated 5/8/2014)

Fidelity’s frequent trading policy for Select funds discourages roundtrip transactions, which Fidelity defines as selling new shares before the 31st day of ownership (including both the day of purchase and the day of sale). The more roundtrip transactions an investor incurs, the more progressively Fidelity restricts that investor's ability to make exchanges, so Fundranker avoids roundtrip transactions on its regular exchanges altogether by carefully selecting our exchange dates so that we always hold funds for at least 31 days.


How does Fundranker set its exchange dates? (updated 8/1/2014)

To help you understand our exchange dates, let us define three dates: early, late, and regular. To allow time to distribute the newsletter, we never exchange earlier than the first trading day after the first day of the month, which we define as our early exchange date. To avoid roundtrip transactions on funds purchased the month before, we would exchange on the first trading day at least 30 days after the date the new funds were purchased (31st day of ownership), which we define as our late exchange date. Finally, we define our regular exchange date as the date we actually set for exchanges, either our early exchange date or our late exchange date, depending on the need to avoid roundtrip transactions. For July, 2014, our early exchange date was July 2, our late exchange date was July 7, and because we exchanged funds we bought on June 4 and needed to avoid roundtrip transactions, our regular exchange date also was July 7.


When should investors make exchanges to start a real life portfolio based on the Top Eight Model Portfolio? (updated 8/1/2014)

We suggest that investors make exchanges to start a new portfolio based on the Top Eight Model Portfolio on the early exchange date for a given month, as defined above. To avoid roundtrip transactions the next month, investors should wait at least 30 days to exchange any of their new funds, regardless of the regular exchange date for the next month. We make these suggestions, but please note that all your investment decisions are made by you, individually or with your investment advisor, and are at your own risk.


Is it important to rebalance the eight funds in a real life portfolio based on the Top Eight Model Portfolio? (updated 2/4/2016)

Fundranker research indicates that occasionally rebalancing the funds in a real life portfolio based on the Top Eight Model Portfolio results in a better long-term performance. In our hypothetical Top Eight Model Portfolio, on each Fundranker exchange date, we divide the total value of the eight funds from the previous month equally into the eight funds for the new month, thus starting all eight funds with exactly equal dollar balances every month. Obviously, this cannot be done in real life due to the exigencies of Fidelity exchanges, but it does allow a pure measure of performance of an equally balanced portfolio of eight funds.

In our research, we tracked an unadjusted Top Eight Model Portfolio, and it became more and more unbalanced over time. Furthermore, the unbalanced portfolio did not perform as well as the balanced Top Eight Model Portfolio. To answer the question, then, yes, it is important to at least occasionally rebalance a real life portfolio based on the Top Eight Model Portfolio.

Investors following the Fundranker system can rebalance funds in their portfolios by adding new money to funds with lower balances or by shifting money from funds with higher balances to funds with lower balances, keeping in mind, of course, that roundtrip transactions must be avoided. We make these suggestions, but please note that all your investment decisions are made by you, individually or with your investment advisor, and are at your own risk:

In general, on the early exchange date for a particular month, as defined above, as long as it falls at least 30 days before the early exchange date for the next month, and whether or not it’s the regular exchange date for said month, an investor can add money to funds with lower balances which are not being exchanged for said month. The money added can come from elsewhere in the investor’s Fidelity funds, or it can come from higher balance Top Eight Model Portfolio funds that were purchased at least 30 days before. Fidelity has no lower limit for the amount of money that can be exchanged from one existing fund to another.

Also in general, on the regular exchange date for a particular month, whether or not it’s the same as the early exchange date for said month, an investor could add money to new funds that are being purchased that day. The money added can come from elsewhere in the investor’s Fidelity funds, or it can come from higher balance Top Eight Model Portfolio funds that were purchased at least 30 days before. In practice, the investor would be making an all shares exchange from an outgoing Top Eight fund into the new fund as well as a second exchange to add additional money to that new fund. Unfortunately, Fidelity requires both exchanges to meet the minimum investment for a new fund, so the least amount an investor can add to a new fund in most accounts is $2,500. For Fidelity Simplified Employee Pension-IRA, Keogh, Self-Employed 401(k), and Non-Fidelity Prototype Retirement accounts, which have a smaller initial investment minimum, the least amount an investor can add to a new fund is $500.


How do I change the way PayPal charges me for my subscription renewal? (updated 5/16/2018)

If you subscribed to Fidelity Select Fundranker by clicking the Subscribe button on the Home page and using PayPal, your subscription is renewed automatically by PayPal on the day after each anniversary of your initial subscription date. To change how PayPal charges you for your subscription, signon to your PayPal account, click the gear icon at the top of the page, click the Payments tab, click Manage pre-approved payments, and update the payment method for your subscription.


How do I cancel my subscription? (updated 5/16/2018)

We’re sorry that you have decided to cancel your subscription to Fidelity Select Fundranker. Please contact us first if there is anything we can do to improve your experience with Fidelity Select Fundranker and keep you as a subscriber.

If you subscribed to Fidelity Select Fundranker by clicking the Subscribe button on the Home page and paying with PayPal, PayPal renews your subscription automatically on the day after each anniversary of your initial subscription date unless you cancel it. To cancel your subscription, signon to your PayPal account, click the gear icon at the top of the page, click the Payments tab, click Manage pre-approved payments, and cancel your subscription.

If you subscribed to Fidelity Select Fundranker by mailing a check to Fidelity Select Fundranker, please contact us using our Cancel Subscription Form.


How was the Fidelity Select Fundranker system developed?

In early 2003, as we developed our mutual fund trading system here at Fidelity Select Fundranker, we adopted four basic principles: 1) concentrate on Fidelity Investments Select mutual funds, 2) stay 100% invested, 3) monitor the performance of potential funds and move regularly to better performing funds, and 4) stay diversified.

The overwhelming number of mutual funds that exist in the United States made it clear we had to limit the scope of our trading system somehow and led us to our first principle. We chose Fidelity Investments funds because of the breadth of their fund choices, the performance of their funds, their commitment to research, and their groundbreaking Internet technology for managing accounts. Extensive testing showed that the Fundranker system provided a higher overall return using only their Select funds.

Our second principle is to stay 100% invested. Many studies have shown that the certainty of being in the market during upturns more than makes up for being in the market during downturns. The Fundranker system stays 100% invested in Select funds and never holds cash.

For our third principle, we wanted to monitor the performance of Fidelity’s Select funds in a way that showed us how well each fund was performing in current market conditions so that we could move regularly to better performing funds. We developed a rating system that includes long-term performance, emphasizes short-term performance, and rewards top-performing funds. With these criteria, deserving funds rise quickly into the Top Eight Model Portfolio, stay in while they are still performing well, and fall out quickly when their performance declines.

For our fourth principle, we wanted our model portfolio to be well diversified. Fidelity’s 41 Select funds (39 as of June 19, 2009) cover every imaginable sector of the market and provide substantial diversification in the pool of potential funds for the Fundranker system. In early 2003, using seven years of historical data, we tested how many funds to hold in our model portfolio. Though many combinations showed superior performance compared to market indexes, holding equal amounts in eight funds gave the best overall performance as well as providing diversity.


How much of Fidelity Select Fundranker’s performance presented in the newsletter and on the website is due to back testing vs. forward performance? (updated 2/4/2016)

We developed the Fidelity Select Fundranker system in early 2003 using back testing on historical data from December 31, 1995 through early 2003. Performance of the Top Eight Model Portfolio for the first six plus years (1997 through May 30, 2003) therefore is hypothetical and attributable to the back testing period, but the Top Eight Model Portfolio’s forward performance from June, 2003, when the editor first began using it for his own investments, still has beaten the broad S&P 500 Index (as measured by Fidelity Spartan 500 Index Fund - Investor Class) hands down. Review Fidelity Select Fundranker charts and results, compare the period from January, 1997, through May, 2003, with the period from June, 2003, forward, and see for yourself that it has performed phenomenally in both periods.