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Is Fidelity Equity-Income Fund (FEQIX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Large Cap Value fund? Fidelity Equity-Income Fund FEQIX is a potential starting point. FEQIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

FEQIX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Equity-Income Fund made its debut in May of 1966 and FEQIX has managed to accumulate roughly $7.27 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FEQIX has a 5-year annualized total return of 11.59% and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 7.61%, 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. FEQIX's standard deviation over the past three years is 9.85% compared to the category average of 9.6%. Looking at the past 5 years, the fund's standard deviation is 9.21% compared to the category average of 9.89%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In FEQIX's case, the fund lost 57.1% in the most recent bear market and underperformed its peer group by 6.98%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Nevertheless, with a 5-year beta of 0.93, the fund is likely to be less volatile than the market average. 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. Over the past 5 years, the fund has a negative alpha of -2.16. This means that 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 primarily on equities that are traded in the United States.

This fund is currently holding about 96.55% stock in stocks, which have an average market capitalization of $122.68 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Technology

Turnover is 36%, which means this fund makes fewer trades than comparable funds.

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, FEQIX is a no load fund. It has an expense ratio of 0.62% compared to the category average of 1.05%. FEQIX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Equity-Income Fund FEQIX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Equity-Income Fund FEQIX looks like a great potential choice for investors right now.

Want even more information about FEQIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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