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Is Fidelity Asset Manager 40% (FFANX) a Strong Mutual Fund Pick Right Now?

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Have you been searching for an Allocation Balanced fund? You might want to begin with Fidelity Asset Manager 40% (FFANX). FFANX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FFANX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.

History of Fund/Manager

FFANX is a part of the Fidelity family of funds, a company based out of Boston, MA. Since Fidelity Asset Manager 40% made its debut in October of 2007, FFANX has garnered more than $1.52 billion in assets. The fund is currently managed by Geoffrey D. Stein who has been in charge of the fund since June of 2009.

Performance

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 4.37%, and it sits 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 4.91%, 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. Over the past three years, FFANX's standard deviation comes in at 4.74%, compared to the category average of 8.12%. Over the past 5 years, the standard deviation of the fund is 4.87% compared to the category average of 8.29%. This makes the fund less 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 FFANX's case, the fund lost 29.21% in the most recent bear market and outperformed its peer group by 7.03%. This might suggest that the fund is a better choice than its peers during a bear market.

Investors should note that the fund has a 5-year beta of 0.44, so it is likely going to be less volatile than 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. Over the past 5 years, the fund has a negative alpha of -0.8. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FFANX is a no load fund. It has an expense ratio of 0.53% compared to the category average of 0.90%. So, FFANX 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 Asset Manager 40% ( FFANX ) 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 FFANXin the Allocation Balanced 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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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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