Small-Caps: Four Fidelity Favorites

05/05/2014 9:00 am EST

Focus: FUNDS

Jim Lowell

Senior Partner & Chief Investment Strategist, Adviser Investments

The best way to gain exposure to the small-cap space is to find a smart, nimble active manager who can sort the grains of wheat from the field's chaff, explains Jim Lowell, editor of Fidelity Investor.

I think Fidelity’s stock pickers give us a decided advantage in the small-cap area. Here’s a look at three small-cap funds that earn our buy rating.

Small-Cap Discovery (FSCRX:US)

This is a US-centric fund. Manager Chuck Myers invests in both growth and value small-cap companies. It began trading in September 2000 and has a market cap of over $6.6 billion.

Foreign investments make up 2.2% of the holdings. The top three sectors are financials (21.9%), information technology (18.4%), and healthcare (15.5%).

Small-Cap Growth (FCPGX:US)

Manager Patrick Venanzi invests in small-cap companies that are believed to have above average potential for growth...but you’ll find traditional value stocks in the mix.

It began trading in November 2004 and has a market cap of over $1.2 billion. Foreign investments make up 3.6% of the holdings. The top three sectors are information technology (23.1%), healthcare (20.4%), and industrials (15.6%).

Small-Cap Stock (FSLCX:US)

This fund can tilt more towards the global small-cap stock stage, but it has traditionally been predominantly a domestic play on that stage. Manager Lionel Harris invests in small market capitalization companies.

It began trading in March 1998 and has a market cap of over $2.2 billion. Foreign investments make up 10.9% of the holdings. The top three sectors are financials (20.8%), information technology (20.2%), and industrials (15.9%).

Small-Cap Value (FCPVX:US)

Manager Chuck Myers invests in small-cap companies that are believed to be undervalued in terms of assets, sales, earnings, potential for growth, cash flow, or in relation to similar companies in the same industry that have garnered a lot of investor attention and assets.

It began trading in November 2004 and has a market cap of over $2.1 billion. Foreign investments make up 2.8% of the holdings. The top three sectors are financials (38.8%), industrials (14.8%), and information technology (13.5%).

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