(By John Bonnanzio) It's axiomatic that Fidelity's biggest stock funds are typically their best long-term performers. That's because successful funds attract assets.
And while some studies suggest that large funds eventually lose their performance mojo (because their ability to trade is diminished), some of the funds below make mincemeat of that assertion.
Blue Chip Growth (FBGRX)
This fund is tiny compared to the others reviewed here, but at $11 billion in assets it's certainly a big fund.
Having just marked his third year on this assignment, there's no question that manager Sonu Kalra is up to this big task: under his stewardship, the fund is outpacing over 90% of the industry's large-cap growth funds.
Unlike the much bigger Contra or Low-Priced Stock funds, each year, Sonu turns this portfolio over completely. That's a lot of trading and expense (though at 0.94%, its expense ratio is substantially lower than the industry norm of 1.21%).
That said, Sonu's made all that trading work well for his shareholders. We anticipate that won't change any time soon.
Contrafund (FCNTX)
With its $61 billion in assets, Fidelity's largest stock fund turns the "too-big-to-succeed" mantra on its head. Credit Will Danoff, who will soon mark his 22nd year of stewardship.
Having invested through all markets with shifting combinations of big and small, growth and value stocks, the misnamed "Contra" (there's little contrarian about it) has made a lot of people a lot of money.
There's no single reason for Danoff's successes, though his growth-at-a-reasonable priced investment style warrants mention. For example, in 1999 (during the Internet/Y2K craze), Contra didn't double in value like the Nasdaq Composite, but it fared far better after that bubble burst.
That's not to suggest that Will isn't a great tech investor or is unwilling to pay a premium for
growth. He has and always will. (Think Apple (AAPL) and Google (GOOG)) But he also likes well-run firms with defensible franchises. (Willís not perfect, as his tiny bet in Facebook suggests!)
Presently, this large-cap growth fund is over-weighted in tech, and he's making big bets in consumer discretionary stocks. With portfolio turnover of only 50%, it's clear that Will takes the longer view ... always has, always will.
Growth Company (FDGRX)
First, the bad news: this fund has been closed to new investors since 2006. Pundits will argue that its large size (now $25 billion, and it's been far bigger) presents capacity constraints.
We, on the other hand, argue that Wymer has done an amazing 15-year job of handling a large-cap growth offering that, on its own, dwarfs the size of entire mutual fund complexes!
Devoted to buying stocks whose earnings and revenues consistently outpace their peers and the fund's Russell 3000 Growth benchmark, the performance-consequence of this creed remains central to quelling the apostles of "too-big-to-succeed".
Low-Priced Stock (FLPSX)
Let's get this admission out of the way: we sold this fund in July from our models because we preferred the lower-volatility and higher dividend yields available elsewhere.' We also sought to reduce the foreign equity exposure that comes with owning this fund.
Moreover, our modest downgrade to OK to Buy from Buy was no reflection on Manager Joel Tillinghast's skills, but rather a statement that our bias is for bigger-cap stocks.
Performance-wise, the trades are a mixed bag. But if the markets become volatile our trades may prove the wiser.
That said, Joel is unquestionably a great fund manager. Having conceptualized and started Low-Priced two-plus decades ago, and having delivered shareholders a 13.8% average annual return, is it any wonder that assets have grown to $24 billion (even as the fund has been closed on several occasions)?
Credit Joel's hard work and sharp eye for "cheap" value stocks which he patiently holds until the market realizes their fair price.
A mid-cap fund with lots of large- and small-cap holdings here and abroad, Low-Priced is simply one of the most unique and best-run funds ever.