Having trouble finding a Large Cap Blend fund? Fidelity Dividend Growth Fund FDGFX is a possible starting point. FDGFX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
We note that FDGFX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a " buy and hold " mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FDGFX. The Fidelity Dividend Growth Fund made its debut in April of 1993 and FDGFX has managed to accumulate roughly $6.14 billion in assets, as of the most recently available information. The fund is currently managed by Gordon Scott who has been in charge of the fund since April of 2017.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 12.47%, and is in the middle 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 8.01%, 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 FDGFX over the past three years is 9.79% compared to the category average of 9.64%. Over the past 5 years, the standard deviation of the fund is 9.74% compared to the category average of 9.49%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In FDGFX's case, the fund lost 56% in the most recent bear market and underperformed its peer group by 6.26%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.98, which means it is hypothetically as volatile as the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. FDGFX has generated a negative alpha over the past five years of -1.66, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Investigating 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 primarily on equities that are traded in the United States.
Right now, 95.79% of this mutual fund's holdings are stocks, which have an average market capitalization of $154.95 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
This fund's turnover is about 43%, so the fund managers are making fewer trades than its comparable peers.
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, FDGFX is a no load fund. It has an expense ratio of 0.52% compared to the category average of 1.01%. From a cost perspective, FDGFX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Overall, Fidelity Dividend Growth Fund has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
This could just be the start of your research on FDGFX in the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.