Fidelity Select Fundranker

Fundranker Blog—March 2016 Archive

Investing in Energy

Fidelity Viewpoints published an article back in February about opportunity for long-term investors: Time for oil stocks? They point out that there has been an unprecedented pullback in oil since late 2013, and consequently, energy stocks look really cheap compared with their history. So the article asks, “Are energy stocks a buy—or are today’s prices a value trap?” The answer, they contend, depends on your time frame and tolerance for some gut-wrenching ups and downs. Finally, they point out that the seeds of a recovery in oil have already been planted.

We see this as a golden opportunity to combine a cautiously optimistic outlook in energy with the tried and true dollar cost averaging investment technique. Investors with an appetite for long-term returns could begin now to invest a set amount periodically in four Fidelity Select funds: Energy, Energy Service, Natural Gas, and Natural Resources. With the dollar cost averaging technique, an investor would buy more shares when net asset values fall and fewer shares when they rise, thus lowering the average cost per share over the long run.

Despite these four funds performing at the top end of Select funds in March, they still dwell in the bottom half of our Fundranker rankings. Unless they continue to outperform, they could languish in the bottom rankings for some time. For investors who want to take advantage of their possible rise in our rankings before they advance into the Top Eight Model Portfolio, and who are willing to take on the associated risk of underperformance, now may be a good time to begin investing in energy sector Select funds.

Posted 3/30/16 12:55pm ET in Investing | Permalink | Comments (0)