Fidelity Ads of Mutual Fund: Looking for More Growth and Income

Check financial analysis of looking for more growth and income, a Fidelity Investments Ads about mutual fund. Discover each mutual fund review in the advertisement and details analysis for your retirement account or brokerage account.

Growth and Income Funds by Fidelity

Recently, Fidelity Investments have provided one page ads about growth and income place to invest at Barron’s financial newspaper (September 2, 2013 - Page 2). They have chosen three mutual funds for investors to invest. I will provide each fund review below. Only one of the mutual funds is worth to consider for long term investment. More about this information can be found below.

The ads contents are:
Fidelity Ads of Mutual FundLooking for more growth and Income? Here’s why dividends may be the answer. 40% of total stock returns come from dividends.
  • U.S. companies have $1.8 trillion in cash – the highest level in history per Morningstar, EnCorr, and FMRCo on January 2013
  • Many are using this extra cash to raise dividends – in fact, dividends have been rising faster than earnings.
  • Payout ratios are still near 50-year lows, suggesting plenty of room to rise
Choose these funds for your portfolio:
  • Fidelity Equity-Income Fund (FEQIX)
  • Fidelity Growth & Income Portfolio Fund (FGRIX)
  • Fidelity Strategic Dividend & Income Fund (FSDIX)

Funds for Investing

Fidelity Equity-Income Fund (FEQIX)

As one of the Fidelity Fund Picks, Fidelity Equity-Income Fund uses its assets to purchase income-producing stocks, especially large cap value stocks. This Fidelity fund invests in U.S. and non-U.S. stocks. The fund managers are James Morrow, Adam Kramer, and Ramona Persaud since 2011. The dividend yield is 2.44%. Its total net assets are $9.41 billion.

To invest in your brokerage account or IRA account, you need $2,500 initial investment. Ranked with only 2 stars ratings, it has returned 26.87% over the past year, and 15.29% over the past 3 years. This large value mutual fund has been lagging its benchmark, Russell 3000 Value, for the past 10 years. The top 3 stocks are JPMorgan Chase & Co, Wells Fargo & Co, and Chevron Corp.

My opinions are:
  • Avoid this mutual fund hence it has been lagging
  • The fund’s managers are new, and they still can’t outperform the benchmark for the past year
  • Choose other equity income funds such as Vanguard Equity-Income Fund (VEIPX)

Fidelity Growth & Income Portfolio Fund (FGRIX)

Fidelity Growth & Income Portfolio Fund has a dividend yield of 1.77%. It invests mainly in common stocks with a focus on those that pay current dividends and show potential for capital appreciation. Incepted on December 30, 1985, it has been managed by Matthew Fruhan since Feberuary 2011. Its expense ratio is only 0.71%. This large blend mutual fund share price is $24.98.

Ranked with bronze rating, this top Fidelity fund has returned 30.15% over the past 1 year and 19.65% over the past 3 year. It has managed to beat its benchmark, S&P 500, for the past 3 year. The top 3 sectors are Financials, Information Technology, and Healthcare.

My opinions are:
  • This large cap stock mutual fund has potential with its new manager
  • The fund performance has improved for the past 3 year

Fidelity Strategic Dividend & Income Fund (FSDIX)

Ranked with 3 stars rating, this Fidelity Strategic Dividend & Income Fund uses its assets to buy a neutral mix of approximately 50% common stocks, 15% REITs and other real estate related investments, 15% convertible securities, and 20% preferred stocks. The expense ratio is 0.80%. This non transaction fee (NTF) fund has annual portfolio turnover rate of 50%. It has $3.8 billion of total assets.

For the past 5 years, this large value mutual fund has been lagging its competitor and its benchmark. For the past 1 year, it has only beaten 4% of its competitor funds or peers. The top 3 stocks are Microsoft Corp, Chevron Corp, and Apple Inc.

My opinions about FSDIX fund are:
  • Avoid this mutual fund hence it has been lagging its peer
  • Select other mutual fund such as Vanguard Windsor Fund (VWNDX) or T. Rowe Price Value Fund (TRVLX)

Bottom Line

While  an ads looks promising, investors need to research and find out the investment. Long term investment needs dedication and understanding to achieve long term goal. Investing in financial or brokerage account or 401(k) account or individual retirement account (Roth IRA or traditional IRA), investors needs to choose and select the best investment.

My conclusion:
  • Not all ads are good for long term investment
  • Only Fidelity Growth & Income Portfolio Fund is worth to consider.
  • Choose other index funds for better performance


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