Is Fidelity Dividend Growth Fund (FDGFX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Large Cap Blend fund category, Fidelity Dividend Growth Fund (FDGFX) could be a potential option. FDGFX has a Zacks Mutual Fund Rank of 1 (Strong Buy), 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. Since Fidelity Dividend Growth Fund made its debut in April of 1993, FDGFX has garnered more than $4.67 billion in assets. The fund's current manager, Gordon Scott, has been in charge of the fund since April of 2017.
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 7.42%, and it sits 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 3.64%, 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. Compared to the category average of 16.28%, the standard deviation of FDGFX over the past three years is 19.91%. Over the past 5 years, the standard deviation of the fund is 16.31% compared to the category average of 14.06%. This makes the fund more volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 1.04, which means it is hypothetically more 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 -6.25. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FDGFX is a no load fund. It has an expense ratio of 0.48% compared to the category average of 0.97%. Looking at the fund from a cost perspective, FDGFX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Overall, Fidelity Dividend Growth Fund ( FDGFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Dividend Growth Fund ( FDGFX ) looks like a good potential choice for investors right now.
Your research on the Large Cap Blend segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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.