On August 1, Fidelity took direct aim at index fund competitors Vanguard, Blackrock’s iShares ...
A Top Trio of Mid-Cap Managers
06/26/2014 9:00 am EST
Mid-cap stocks are now at mid-cycle; on the whole, they are looking far from cheap. As such, there is now an ocean of risk in buying mid-cap index funds that own “all the fish” in that sea, cautions fund expert Jim Lowell, editor of Fidelity Investor.
However, there is also plenty of opportunities for actively managed mid-cap funds to selectively catch more gains. Here’s a look at some of our buy-rated mid-cap choices from among Fidelity’s funds.
Leveraged Company Stock (FLVCX)
Manager Thomas Soviero invests in companies that issue lower-quality debt and companies with leveraged capital structures. While Tom did not invent this fund, he trained under the original manager, David Glancy. It began trading in December 2000 and has a market value of $4 billion.
Tom has been going a bit more global over the years, cautiously treading where few other leveraged managers go. Foreign investments make up 13.7% of the holdings. The top three sectors are consumer discretionary (23.5%), materials (13.3%), and financials (12.5%).
Low-Priced Stock (FLPSX)
I view Joel Tillinghast as kin to genius. I now call him “lead manager” since he is training a team of low-priced stock pickers who currently run 5% of the fund; but it’s still “all Joel, all the time.”
Joel invests in low-priced stocks, which are stocks priced at $35 or less at time of purchase. This tends to mean that Joel doesn’t get trapped chasing the last stages of an irrationally exuberant market. It also means that, in a bear market trough, he can buy almost everything under the market’s sun.
New Millennium (FMILX)
This trend following fund shouldn’t be confused with a price momentum approach. Instead, manager John Roth analyzes changes in the marketplace, such as technological advances, product innovation, demographics, and social attitudes, and makes investments based on how he thinks these long-term changes will pan out.
Business and product trends used to take years to materialize. These days, with smart phones and tablets, a trend can catch fire overnight and be little more than smoke in a matter of months.
I like the manager of this fund, and this fund’s ability to be nimble and quick and even willing to risk being wrong for the sake of getting a few trends right. It began trading in December 1992 and has a market value of over $3.4 billion.
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