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.

Subscribe to Fidelity Monitor & Insight Report here…