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Is Fidelity Fund (FFIDX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
Updated
MGIC (MTG) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

On the lookout for a Large Cap Blend fund? Starting with Fidelity Fund (FFIDX) is one possibility. FFIDX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FFIDX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a " buy and hold " mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FFIDX. Fidelity Fund made its debut in April of 1930, and since then, FFIDX has accumulated about $4.36 billion in assets, per the most up-to-date date available. The fund's current manager, Jean Park, has been in charge of the fund since April of 2017.

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Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 14.12%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 14.53%, which places it in the middle third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of FFIDX over the past three years is 9.59% compared to the category average of 9.64%. The standard deviation of the fund over the past 5 years is 10.05% compared to the category average of 9.41%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In FFIDX's case, the fund lost 51.66% in the most recent bear market and outperformed its peer group by 1.99%. This could mean that the fund is a better choice than comparable funds during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 1, which means it is hypothetically as volatile as the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. FFIDX's 5-year performance has produced a negative alpha of -0.29, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.

This fund is currently holding about 89.56% stock in stocks, with an average market capitalization of $227.16 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Finance

With turnover at about 38%, this fund is making more trades per year than the comparable average.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FFIDX is a no load fund. It has an expense ratio of 0.50% compared to the category average of 1%. So, FFIDX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Fund ( FFIDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Don't stop here for your research on Large Cap Blend funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FFIDX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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Zacks Investment Research