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When we started, Fidelity had the biggest sector-fund selection: the so-called Select funds.
But the Masters' Select funds use multiple managers with a different purpose in mind.
Bill Nygren, manager of the Oakmark and Oakmark Select funds, prefers Lowe's rival, Home Depot.
Applied broadly, investors can use the M2 technique to select funds that are efficient risk-takers.
At the end of the third quarter, Fidelity's select funds had a total of $12.6 billion in assets, down from $43.5 billion at the end of August 2000.
At the end of August, 30 of the 41 Select funds had managers who had run their fund for less than a year.
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Investors select fund managers on the basis of their recent performance.
Fidelity rotates its analysts from one Select fund to another to give them a breadth of knowledge.
He likes the JPMorgan High Yield Select fund for tax-deferred accounts, because of its seasoned management team and flexible style, and the Nuveen High Yield Municipal Bond fund for taxable accounts.
Many sector-rotation strategies have begun to favor non-Fidelity sector funds, because Fidelity levies a 0.75percentt redemption fee if a Select fund is sold within 30 days of purchase.
During the bear market of the last two years, someone who invested in the top-performing Select fund each year would have had an annualized return of 46.3percentt, versus a loss of 10.9percentt for the market.
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