In the second quarter of 2025, the Fidelity Select Consumer Discretionary Portfolio demonstrated a robust performance, registering an increase of 10.92%. This growth, while significant, was marginally below the benchmark MSCI U.S. IMI Consumer Discretionary 25/50 Index. The period saw the introduction of new investment positions within the portfolio, notably including modest allocations to high-end home furnishings retailer RH and homebuilder Cavco Industries. Despite the positive market returns for consumer discretionary stocks, which outpaced the S&P 500 index, the broader economic climate faced considerable ambiguity, largely influenced by governmental policies, particularly concerning tariffs. These factors contributed to a nuanced investment landscape for the fund during the quarter.
During the April to June period of 2025, consumer discretionary equities, as measured by the MSCI U.S. IMI Consumer Discretionary 25/50 Index, collectively appreciated by 11.51%. This sector's performance surpassed the 10.94% rise observed in the broader S&P 500 index. This occurred even in an environment marked by a discernible cooling of consumer confidence and expenditure. The quarter's investment decisions reflected a strategic approach to capital allocation, incorporating new ventures that aligned with the fund's objectives despite the prevailing economic uncertainties. The fund's managers aimed to navigate these conditions by selectively investing in companies that presented attractive growth prospects within the consumer discretionary sector.
A critical aspect of the quarter's investment strategy involved making calculated moves into new market segments. The decision to acquire modest positions in companies such as RH, a prominent player in luxury home furnishings, and Cavco Industries, a significant entity in the homebuilding sector, underscored a targeted approach to diversification and growth. These new additions to the portfolio were made with careful consideration of their potential to contribute to the fund's overall performance, acknowledging the varied dynamics within the consumer discretionary market. The emphasis was on identifying opportunities that could thrive amidst the evolving economic landscape.
As the second quarter drew to a close, an analysis of the fund's holdings revealed specific areas of strategic concentration. The portfolio maintained an overweight stance on several companies relative to the MSCI industry index. These included Somnigroup International, known for its bedding and sleep products; Dick's Sporting Goods, a leading athletic goods retailer; Lowe's, a major home improvement retailer; Aptiv, a global technology and mobility company; and Domino's Pizza, a renowned food service chain. These strategic overweight positions signify the fund's conviction in the continued growth potential and market resilience of these particular entities within the consumer discretionary domain, forming a core part of its investment thesis for the period.
Looking back at the quarter, the fund's performance illustrates the complexities of investing in consumer-focused industries. While the overall market for consumer discretionary goods showed strength, individual sectors and companies within this broad category experienced varied fortunes. The strategic introductions of new holdings and the maintenance of significant positions in key companies highlight an adaptive investment posture. This approach sought to capitalize on opportunities while mitigating risks presented by a somewhat unpredictable economic environment, ensuring the portfolio remained aligned with its long-term objectives despite short-term fluctuations.