I created the Retirement Paycheck portfolio for investors who primarily want income from their inves...
Top Stock-Picker Steers Fidelity Low-Priced Fund
06/14/2019 5:00 am EST
As longtime shareholders know, Joel Tillinghast is one of the industry’s best stock-pickers; he has been the manager of Fidelity Low-Priced Stock (FLPSX) since its1989 inception, explains John Bonnanzio, fund expert and editor of Fidelity Monitor & Insight Report.
Although Low-Priced has always been benchmarked against the Russell 2000 (a small-cap blend index), Joel’s never been completely beholden to it. That’s because he’s a value investor, preferring inexpensive stocks over faster-growing ones that often command a price premium.
But as the fund’s success attracted huge assets (in more recent years — and in spite of their strong records — redemptions have shrunk this and other actively run funds as investors have embraced lower-cost, index funds), its investment universe has had to morph.
For years, Joel and his five-member team of analysts/co-managers have searched the globe for mid- and even large cap stocks. Notably, 35% of its $25 billion in assets are invested abroad, including a nearly 8% stake in the emerging markets.
In terms of its median market cap, at $9.4 billion Low-Priced is situated at the top end of the $2-10 billion mid-cap range. While 34% of its assets are in mid-caps, it holds much more (44%) in large caps, whereas a modest 22% is in small caps.
That’s quite the underweight relative to the Russell’s 47% stake in small-caps (companies valued below $2 billion). Notably, Low-Priced Stock’s “Active Share” measure of 96% means that there’s essentially no overlap between the fund and its Russell 2000 benchmark.
Classified in the Scorecard as a mid-cap value fund, a strong argument can be made that Low-Priced should be situated alongside other, too-difficult-to-classify Specialty funds as it has little in common with either its benchmark or three other mid-cap value fund “peers.”
While some have superior returns over different periods, they’ve all done so with substantially more risk — on average 30% more That means that Joel and his team are providing investors with superior, long-term risk-adjusted returns which, in turn, is one reason why Low-Priced Stock is the only midcap value fund we rate Buy.
Related Articles on FUNDS
More loans, more profits and (eventually) more dividends are the playbook for our generous payer Bla...
Good U.S. and China trade talk news have been overshadowed by concerns revolving around the coronavi...
Western Asset Emerging Markets Debt Fund (EMD) holds 290 bonds issued by governments like Peru, Indo...