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Is Fidelity Growth Company (FDGRX) a Strong Mutual Fund Pick Right Now?

On the lookout for a Large Cap Growth fund? Starting with Fidelity Growth Company (FDGRX) should not be a possibility at this time. FDGRX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FDGRX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

FDGRX is a part of the Fidelity family of funds, a company based out of Boston, MA. Since Fidelity Growth Company made its debut in January of 1983, FDGRX has garnered more than $23.48 billion in assets. The fund is currently managed by Steven S. Wymer who has been in charge of the fund since January of 1997.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FDGRX has a 5-year annualized total return of 11.3% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 11.44%, which places it in the top 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. FDGRX's standard deviation over the past three years is 16.2% compared to the category average of 11.06%. The fund's standard deviation over the past 5 years is 14.97% compared to the category average of 10.83%. This makes the fund more 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 the most recent bear market, FDGRX lost 50.25% and underperformed comparable funds by 1.41%. This might suggest that the fund is a worse choice than its peers during a bear market.

Investors should note that the fund has a 5-year beta of 1.21, so it is likely going to be more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a positive alpha of 1.4, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

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 principally on equities that are traded in the United States.

Right now, 97.25% of this mutual fund's holdings are stocks, which have an average market capitalization of $307.64 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
  3. Health

Expenses

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, FDGRX is a no load fund. It has an expense ratio of 0.86% compared to the category average of 1.05%. FDGRX 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 Growth Company ( FDGRX ) has a low Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds 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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